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Increase Steam Level

It doesnt matter.

Achievements and playtime.

Also, theres a page which tells you stuff you gotta do outside games. Like share a pic, share a video, make a sale (trading cards and junk) and a few other things. I dont even know my level. I've been on Steam since it started and I've done everything except share a video.
 
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I think higher level allows larger friends lists and such. No real value to the majority of us

Yes. That and the higher the level, the higher the likelihood of receiving random trading card booster packs (which you could sell or keep and collect if cards are your thing).

To be clear, I don't think ANY game achievements increase your level. Badges do. You receive a badge by either jumping through some Valve hoops (like shortylickens showed above) or crafting a badge by collecting trading cards (once you have the set, you craft the badge). Some badges can be leveled up....giving you more xp to earn a higher level.
 
Steam Level is not so much about the features it gives you (Additional 5 friends per level, every 10 levels you can place a new showcase on your profile, etc). The features given by leveling up on Steam are not so much about how much use they have. Steam levels are more important when you need a reputable profile. I'll give you a couple examples of when it is helpful to have a high level steam account: You are a mass trader, when you are looking to trade your inventory of items whether it be TF2, CSGO, Dota 2, etc. Players will trust you with trades based on your steam profile level, and your profiles lifetime on Steam. Also a higher profile level comes in hand when you are a broadcaster, as it will bring extra attention to your profile making more users intrigued to click links on your profile. Nobody trusts a level 3 profile that's posting links to gambling sites and trade sites.
To increase your steam level quickly and for very cheap you can go on several websites that list the cheapest badges to be crafted. The website will show you how much it costs to buy all the trading cards to craft the badge (Example: 24cents total for 6 cards belonging to the game). The site will link you to the marketplace pages and you can get to level 25 for as little as 5$.
 
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