What I've learned from experiments.
Weapon Damage
The level difference seems to have some impact. The high level character will not insta-kill most mobs on a low-level map. Evidence suggests that the weapon damage of the higher level character is scaled down. Specifically, I can visit old russia on earth with my level 20 character and still not one-shot everything. They go down easier than I remember, but some mobs may still require 2 shots.
Player Damage
It seems mobs also have a way of damaging you. If I run into a group of level 2 mobs on old russia as my level 20, I will still take damage enough to kill me. It seems to take longer than I remember but I'm not safe.
Experience
The level 1 character will earn XP if he's close enough (distance-wise) to the level 10 character. He will earn the same XP whether he kills the mob himself, or if it's killed by the level 10 character. Dregs gave us 20 xp each whether we helped kill it or not.
Specifically we tested with the lower level character just running alongside me and when I killed mobs, he got XP. Same way the other way around, if he killed a mob, I got XP even though I did nothing except tag along.
The same XP is awarded to both players, so obviously the higher level character will require a lot more dregs to be killed before levelling up.
Note the distance remark above. If the two players venture too far apart, no XP is rewarded from kills the other player does.
Item Drops
Item drops will mostly be according to the zone level. If you're playing as a level 10 character in a level 2 zone, you'll get level 2-3 drops, with the occasional item more appropriate for your level. Encrypted engrams will, as noted elsewhere on the interwebs, be decrypted at the level you have when you decrypt them so they're just as useful in a level 1 zone as a level 10 zone. No idea whether drop rate is affected though.
Item drops are also personal, which means that all the ammo and item bulbs that you see on the ground is yours.
Mission Rewards
Mission rewards is a one-time event. You only get the rewards when you complete the mission the first time. However, as a higher level character you have a higher chance to get encrypted or decoherent engrams containing shiny loot, which offsets this. It is not a waste of time to play with your lower level friends!
So to recap:
- Low-level character earns XP when he kills mobs, and he earns the same XP when the high-level character kills mobs, the latter only if the two characters are actually playing together (ie. not on opposite ends of the map). I don't know what the distance range is but it wasn't exactly stand-on-top-of-each-other either.
- Low-level character earns item drops as usual, according to the zone. As does the high-level character, but he'll get some item drops that aren't useful (too low level).
- High-level character is slightly overpowered for the zone, but not to the extent that you can level the zone just by sneezing.
Conclusion
It's probably best to be fairly close in levels, then both/all players will have the most fun and the most to gain, but there seems to be no adverse effects of bringing a high-level friend to help a low-level character, except for the high-level character not really getting a lot out of the process except the friendship.
Mega-conclusion
Destiny is meant to be played together, it seems Bungie has made a system that allows this, even if the players are not the same level.
So team up soldiers, the darkness must be pushed back!
Yes, your Destiny characters are possible to use on both Xbox 360 and Xbox One, and PS3 and PS4. But your character cannot transfer between systems. Either its between Playstations, or between Xboxes. As DualShockers explain here in an interview.
(...) As you’ve discovered, as your Guardian evolves it will be able to travel from one generation of console to the next. Just like hopping worlds, you can use the same Guardian on Next Gen and Legacy Gen consoles – so long as you stay in the same system. Ergo, you can move from PlayStation to PlayStation and from Xbox to Xbox, but not across product lines.
But when it comes to the playing itself, you cannot play on say your PS4 with friends who are playing on their PS3, as PlayStationLifeStyle.net explains here.
I’ll speak for the hypothetical player. I have a disadvantage sniping across the map because [my opponent with a new-gen console] is only two pixels on my screen and I’m four pixels on his. You see that in the world of PC gaming, where people are always racing to the best video card to give themselves the advantage.
Regardless of where the reality is, there’s definitely a perception among gamers that better hardware means you have an advantage. We don’t want to have to enter that fray, so to create the best, most level playing field, both actually and perceptually, we separated it by platform.
Best Answer
You can switch characters fairly easily! Just press Options (or Start on the Xbox One, if that takes you to your inventory screen!), navigate to Settings, and hover over "Log Out."
There, you will see two prompts: Log Out of Destiny and Change Character. The latter is the one you're looking for.