Oh, no question left really, I was just saying that the information that I provided did not have the answer on it (I mean, I did read it first...).
While your normal stats don't increase, you're output damage increases due to your level. I've never known me characters increasing in stats without Magicite.
That is what answered my question. Incidentally does anyone have a (working) link to a page that specifically states this information? (ie, the algorithms use to calculate damage via levelling up)

Failing that, does anyone have the formula? I've already seen the one for magic damage ( Damage = Spell Power * 4 + (Level * Magic Power * Spell Power / 32), from the link) but I would like to know how levels play a part in physical damage as well...