Sorry if this is a dumb question, but I notice I'm accruing XP and levels for my driver, the different locomotives, and the route itself. What do these different levels do? Do they unlock alternate liveries or anything?
Nah, there are no unlocks. That's something Matt specifically wants to avoid, as that begins to turn the sim into too much of a typical videogame. The levels are just there to represent how much you have used the loco/route. You might think the distance traveled would do the same thing, but you get more XP for doing more complex stuff, like a stopping service, than the same length of just nonstop driving, so there is a difference to the measurement.
