The tower level is leveled up by merging lines. It increases their health, damage etc. To scale for the later waves you need a lot of levels or your towers get shredded like paper.
But it is not the most balanced/perfectly tweaked I ended up solving a major bug in the game that wildly swung the balance while I was implementing the 2x2 towers (turned out 2 1x1 towers were spawning on each tile and were doing double the damage they should cause double the attacks), and I didn't have time to tweak the balance much better after.