Experience

Overview
The experience of the character can be acquired by killing monsters, digging, destroying plants etc. Experience gained by killing enemies is calculated using the following formula:

MobStats = (MobMaxLife + MobDamage + MobDefense)

Exp += (MobStats * (MobLevel * 0.1))

You can get an Experience boost or penalty depending on level difference between you and the enemy, however, since version 5 of N Terraria, the minimum experience penalty you may get by killing low level monsters is 10%.

Events can either increase or decrease your exp gain.

Killing bosses without being hit doubles the exp gain.

Once your experience bar fills up you will level up, which will improve your stats.

Combo System
Introduced in version 3.1.3 B, with attack experience enabled, every attack done by a character on a hostile mob adds to a player's combo counter. This counter is reset after a few seconds without landing an attack or whenever the player takes damage including damage taken from the environment like lava, falling, and thorns.

Increase in the attack experience are calculated using this formula: ExperiencePerDmg=1+(0.01*Combos). Such that 1000 combos would give 11xp for every point of damage done to an enemy.

Combos also improve experience gained from killing enemies, but more testing is needed to find out how it is applied.

Attack Experience
By default, attacks give additional base experience points, this can be configured in the settings tab. The experience is based on the damage done and the current number of combos.

World Level
The world level determines what level the NPCs are at and how much bonus experience characters will get. All NPCs will be the same level as the world is, and the xp bonus is 2* at world level 100.

Character Level Tables
Experience listed as how much needed to get from listed level to the next, so that 125 experience is needed to get from level 1 to level 2.

Raccoon Trivia
Yep, the mod begun here, with only the leveling. At first, the mod were very simplistic, only had level and exp, and the character status increased with the level, so there weren't status points to spend. The hud only showed the player level and exp. The monsters themselves were also scaled to the player level, so that were an "equal challenge" to face them.

The first feedbacks I've received after posting the mod on the forums, was like a "go ahead, we want to see more of this", then I really got into improving the mod more and more.

The mod itself is popular because of It's leveling system, I believe It's because It's simple to understand, and also familiar, since I've made it with the Ragnarok Online leveling system on mind. I avoid to complicate the status system of the game, even more since an error could end up telling that you would have to recreate your character or not.

Beside the grinding on end game is very insane on earlier mod seasons, you were able to see the result of your efforts spent by tackling on monsters of your level, or higher.

Experience system on tModLoader
I made a mod that adds the experience system of N Terraria to tModLoader. It's name is NExperience Mod, It's a bit broken, but mostly functional.