Stars and levels only add basic stats. Star levels increase the multiplier of each level. There is some sort of balance to power thing but really you need levels for gear and ability levels. So with star level increasing the multiplier for levels leveling a 7* hero from 50 to 60 has a much greater increase in stats than a 2* hero from 50 to 60.
Gear adds to all stats including the more useful ones such as speed and potency (and obviously protection).
Back when the game started and the caps were much lower stars had a much larger impact on the game, now gear is the greatest impact (other zetas). Such when the game started stars were the most important thing (level cap 6 gear cap 7 or 8?) and now its gear and zetas.
Each level of gear adds more to stats and protection than the previous level while each actual level is exactly the same power increase from 1-2 or 84-85.
TLDR: for heroes you use max everything possible in order of importance.
