You can't prevent them from leveling if you are killing monsters while they are in your party. You only have space for 4 members while having 10 characters though. As long as you're only using 4 characters the others will stay at lvl1.
Everytime you start a new campaign you have to choose the characters you are going to use. You can stop your current campaign by opening the options and clicking on main menu
You have to finish your current dungeon/campaign or cancel it. You will be at the main menu again and when you click play you will be able to choose your party members for the next dungeon before you select it. You can use different members every time or just stay with the same team.
Your characters won't loose any exp once they got it, unless you reset all of your characters to lvl 1. You will always have a maximum of 4 members in your party. Those are the ones that get exp. The others don't get any and therefore won't level up.
You have to finish your current dungeon/campaign or cancel it. You will be at the main menu again and when you click play you will be able to choose your party members for the next dungeon before you select it. You can use different members every time or just stay with the same team.
Your characters won't loose any exp once they got it, unless you reset all of your characters to lvl 1. You will always have a maximum of 4 members in your party. Those are the ones that get exp. The others don't get any and therefore won't level up.
Now after I level and switch characters. Do I actually need a level 1 or level 2 character fighting with me, or do they just simply have to be there (on the main screen, but not in my party) for the level lowering effect to occur?
They have to be in your party. The reason for that is because enemy monsters have an maximum level that is equal to all the levels of your active characters divided by the number of characters you are using. Thats why enemys will be lvl 5 if all of your active characters are level5, but only lvl2 if you are using 3x level1 and 1x level5. (5+1+1+1)/4 = 2 But I would just play it the normal way. It's ruining the fun and you will only be able to do this effectively a few times anyway because your other characters will level up quickly.
Had a question about the "Best Dressed" quest. I have my mage in a complete Penitent set, but I guess that's not "epic." What does it mean by "Epic Item Set" then?