Physical level = How strong, smart, buff, quick your character is.
Class level = How proficient your character is with a particular weapon. If you have an axe in your hand, how good are you with it? Can you use axe-related abilities?
A level 50 physical using a level 1 axe might survive for awhile in a high level fight, but will be able to do nothing with his axe (miss, miss, miss, miss, miss, miss)
XI - Draiden 75DRG/75COR (Sylph, Retired 08)