I don’t understand how levels work.

In addition to level, stars, gear, and ability levels, there is also the fact that some characters are better than others. If you're still using Clone Wars Chewie and Ewok Scout, of course Nightsisters will wreck you. There are a lot of helpful getting started guides on here, other websites, and Youtube to help you get going with a farming focus.

But if you think it's bad now, wait until you unlock mods.