Like in other action RPGs, Sora and the rest of the party get XP by defeating enemies. This allows them to gain new levels. This page of our guide to Kingdom Hearts 3 contains all information about character development system used in the game.
Character development system in Kingdom Hearts 3
Every time Sora and his companions gain a new level, they can get a boost to the following stats: HP, MP, Strength (physical attacks), Magic (magic attacks), Defense (attack resistance).
What is more, your characters also get Action Points (AP) and learn new techniques which can be equipped in the Abilities menu. Depending on which Power you chose, Sora will unlock new abilities in a different order. If you chose, e.g. Warrior, combat abilities will have the priority.
As you make progress in the plot, you will get access to new Keyblades and techniques/spells. The maximum character level in the game is 99.
Changing equipment in Kingdom Hearts 3
Besides developing your characters by gaining new levels, you can also change their equipment to increase their combat abilities. Many of these items can be bought at shops, found in the worlds, or crafted. Remember to change your items on a regular basis. Donald and Goofy are really useful and powerful in Kingdom Hearts 3 - don't ignore their development. Try to give them the right items and abilities to make them even more useful.