I've played this game for about a year now, and basically, I can't tell what the point of powerful gear really is in the game (and by "powerful" I mean the power level of gear). Note, I'm not particularly active in Strikes, Crucible or Raids.
From what I can gather, some creatures take reduced damage from either the difference between your level and them, or your power level and them. But once you're at sufficient level (or power level), everything still takes a "couple of hits" to kill off. Power level doesn't seem to make any difference at all. The basic mobs that you encountered at level 5 take just as many hits to take down at level 5 as they did at level 20 (and I'm only just now starting to play the Osiris, Warmind, and Forsaken). Things still take 1-2 headshots, and 3-4 body shots to go down with my level 325 gear as they did with my level 100 gear.
Google searches about "what does power level do" only result in "how to maximize your power level".
Is it really just a gating mechanic to prevent you from doing content unless you've ground long enough, and not just because you do less damage and take more damage?
Best Answer
Power level can be quite confusing and when broken down doesn't get much simpler but it all mostly comes down to damage dealt and damage taken but also what you have access to doing.
First, the simplest thing power level does is cuts off access to higher level activities. These could be story missions, heroic missions/strikes/adventures, nightfalls, raids, and now iron banner and trials of the nine.
Second is damage, from this video that explains it great detail, when you are the same level as an enemy you are doing what is called "base damage". 1 power level above or below the enemy won't make much difference at all but it does being to scale more and more as you get higher/lower than the enemies. At 50 power levels above the enemy you are taking 40.9% less damage, at 49 power levels below the enemy you take 150.6% more damage and dealing 43.12% less damage. And at 50 power levels below you deal nothing and are instant killed by everything.
Now there is one other scenario, the damage you deal when above the enemy power level. This is slightly different, where before your overall power level affected what happened, damage dealing when higher is only changed by the power level of the actual weapon. Basically, if you're in a 500 power level activity, and have a weapon that's 600 then it won't matter what all your other gear is as long as you are above 500. That 600 level weapon will always do the same damage when above the enemy power level. The difference comes from if you have the EXACT SAME weapon but only a lower level on it, only then will THAT weapon's damage change.
Put simply,
So while you could be hundreds of levels above an enemy you aren't going to be unstoppable and kill everything with a single bullet, you'll have an advantage but there's a limit. Conversely, being hundreds of levels below will get you smacked down by the first enemy that sees you, if you're even allowed to get near that activity.