Enemies kill each other and level up off of it. They used to level up WAY too fast but now it's kind of on the slower side.
What used to happen is that by the time day 2 or 3 rolled around almost every enemy would be level 8 or 9 and instakill you and it left you very few opportunities to level up yourself. The dev changed it in one of the recent updates but made it a bit too slow imo. Now it seems like enemies take way longer to reach even level 5 unless there's a trillion bases next to one another.