what do the levels you get with companions do? I saw the first option was asking their preference, but nothing else.
I don't know the specific levels, but at certain threshholds, you gain access to being able alter their inventory, equipment, appearance, and stats. Regular companions are more lax on the requirements, but mercenaries require you to get to level 10 relationship to access everything. It also seemed in the latest update that at 10 relationship, mercs no longer leave you when you exit a dungeon, but that could be a bug. I'm not sure.
There's a tavern next to the starting save point and to the left of the alchemist shop. Inside the tavern are several mercenaries for hire. They take companion points like any other companion, and by default they leave your party if you exit a dungeon. They're an easy way to cheese fights when you have low stats.
Yeah, tavern companions are mainly where the bulk of that lies, with them not leaving, and being able to edit them and access, trade and otherwise manage their stuff as you gain levels. The unlockable companions have all that stuff, with only their preferences being the only thing they can unlock. Would be cool if they had quests at higher relationship tiers, but ya know. Future content.