Level freezing is almost ENTIRELY for sage, and to a minor extent, arena.

Sage bracket is determined by level first, power second. Most levels do not contain enough equal level players for multiple brackets, so it end up being based on level only, with no regard to power. Keeping your level low makes it a lot easier to be the top power in your field.

Arena has a limit of +-10 levels compared to yourself. If you stay at level 84 or below, you can avoid a good number of top players for climbing to 6 paths.

Matsuri is strictly based on your max power displayed in power rankings. Your level, or power from current equipped team does not matter whatsoever. You'll eventually get an advantage in matsuri due to having higher init than anyone you meet without the 60s que timer, but that point take many months to arrive at.

ps: minor pve side effect of level freezing: you can destroy strong approaching, as well as sealed/anbush ninjas in group snake at far lower power by level freezing; as their strength increase exponentially with levels.