By crafting Badges, you gain experience, which raises your Steam level. Benefits of having a higher Steam level include:
Increased Friends list size (+ 5 friends per level added to the cap)
Showcases for your Steam Profile (1 new showcase every 10 levels)
Increased chance of Booster Pack drop (+ 20 % chance for every 10 levels)
A freshly made Steam account is level 0.
Currently the highest level on Steam is 2784 ( http://steamcommunity.com/id/st4ck ). This guy is named "St4ck" and he's from Qatar. His csgo inventory cost is #14 (Csgobackpack.net) as of August 2017. St4ck also goes by the name "inj3ct0r".
To raise your level you can;
Craft badges (100 XP per badge, can up to 5 levels of regular and 1 Foil Badge per game, special badges have no limit)
Collect games (1 XP per non-Free to Play game)
Complete tasks of the community; 100 XP, 200 XP or 500 XP, depends on how many tasks completed.
Gain Event badges (pre-determined amount of experience)
50 XP per year that you have a Steam account
Experience required for leveling:
100 XP for 1 - 10 (1.000 XP total for level 10)
200 XP for 11 - 20 (3.000 XP total for level 20)
300 XP for 21 - 30 (6.000 XP total for level 30)
400 XP for 31 - 40 (10.000 XP total for level 40)
500 XP for 41 - 50 (15.000 XP total for level 50)
The higher your level is the farther up you will appear on your friend's Friend list. And your circle around that Level Looks nicer.