it is a hard level as it's meant to let you have levelled units to use in something else than an easier level like 0-2 (it's not meant to be balanced in any way and is purely for fun, though it is technically still possible with unlevelled units if you use certain cheese strategies)
you can level up units in the "vessel details" menu by feeding & digesting your units to the units you want to bring, and any stats they gain from there will carry over when brought to a level