Levels and grades
Levels are ambiguous in D&D: they reflect one's mastery of one's vocation, and they reflect a certain hierarchical preoccupation that runs throughout the D&D rules, but it's unclear how far they impinge on the gameworld; put briefly, do PCs know what level they are, or feel themselves leveling up? Are level titles meant to be mnemonics for the players only, or do they reflect some process of initiation for the characters?
Let's say it's the latter. Let's posit a common culture across the gameworld, with common standards or conditions for leveling. James goes halfway there, but let's be a bit more formal about it: D&D settings tend to abound in guilds for the various PC classes, why shouldn't those guilds assess, assign and police levels - rather like the coloured belt systems used in martial arts leagues today? To level up, you have to overcome some contest assigned by the guild, or undergo some rite of passage that tests your vertu.* That way you can wear your status on your (eg) sleeve, and get the proper deference, access to numbers of hirelings and all that, due to your experience.** Such a trusted, portable method of assessment/certification would be extremely useful, not only to itinerant ne'er-do-wells (who suddenly have a codified, socially-recognised mechanism for "doing well")*** but also for potential patrons and other authorities.
You can probably see where I'm going here. Before the 16th century, standing armies were rare: troops would either be half-trained peasants or career warriors who were bound to the lord by bonds of fealty - or out-and-out mercenaries, of questionable loyalty and legal standing, and unknown competence. What if there were bonds between lords and guilds - what if guilds' licenses were dependent on furnishing competent people to lords when needed - possibly all under contracts, for wages or loot-sharing? The lord would have an idea of who was available and how command should be structured. He'd also have a complex relationship of negotiations with the guilds regarding duties, agency and rent. He could call on guilds for small missions or territory-wide defence.
So far so Pratchettian, I hear you mumble. But there are some nice opportunities in here for gaming. Usually D&D parties have fairly static numbers, limited goals (personal advancement, punctuated by the occasional Quest for the McGuffin) and predictable social relations (weird loyalty within the group, psychopathic violence without). This mechanism could mess with that. So you're a fifth level fighter, and the goblin horde is coming: if you've reached level 5 of initiation in the guild then you automatically get a company of 1-2 level fighters to command. If you're a sixth level mage, the guild knows you can learn Demonic Stomp, and they have just the job for a Demonic Stomper down in the old deserted graveyard. or they need someone to Charm the ambassador from the Sea Rovers, or maybe they need you to light the fuse on the unstable ordnance with your Thunderbolt. What if your guild is worried about your party mates, or there's inter-guild warfare? What if there's a rumour that the guild's records aren't reliable, or a bunch of obvious charlatans turn up that call the whole ranking scheme into question?
* essential, innate power. Not this.
** this belting/badging system seems to imply a middle class: serfs/tenant farmers are too busy subsisting to become professional raiders, aristocrats are probably locked into their own hierarchies based on gift exchange, land owndership and inheritance, and disdain guild badges)
*** no, but wait: experience is what levels you up, and makes you better at your job! Maybe, but I can think of 2 counter-arguments that could work in-game: (1) when you pass the rite you get access to new training from the guild, that orders your experience into a useful schema - you may have picked up some sword-tricks from fighting the Leng, but you need formal training to improve your stance. (2) Do what Durkheim does, and blame religion as the alienated codification of social rules: the guilds are social recognition, and they have a pseudo-divine (or outright supernatural) effect on the individual - how else can you explain suddenly doubling your hit points?