When you level up on Steam you get extra bonuses like extra slots on your friends list and higher drop rates for booster card packs. There are many a few ways that you can level up on Steam. In this article I will be reviewing a few different methods that can help you level up.

Badges:
Badges are crafted from trading cards which are acquired as you play games (most paid games have trading cards). You must obtain all the trading cards from a game in order to craft the badge for that game. (Note: A game will only drop half of the required trading cards required for crafting a badge you will need to trade for or buy the rest on the Steam marketplace) When you craft a badge it awards your account with 100 XP and more if you craft the badge again. Crafting badges also can give you wallpapers for your Steam profile. This is one of the main ways people level up on steam.

Buying/Owning Games:
This is pretty basic, the more games you buy the more XP you will get. You can get more cards if you buy more games. If you get a certain amount of games you will get a achievement/badge that will grant you more XP, see image below as an example:

Steam Ambassador Badge:
Another simple way to get more XP on Steam is completing simple tasks from the community ambassador badge. Many of the tasks are simple and can get lot quite a bit of XP if you complete alot of them. Here is how the tasks look like:

Years of Service and Sales:
Every year since the day your created your steam account you will get some XP for being on Steam for (blank) ammount of years. Also by patricpating in Holiday sells you will get an achievement that will give you 100 XP.

Here is a list you can refer to so you can see what you get each time you level up and how much XP you will need to level up:
Level 1 - 100XP = +5 Friends Slots
Level 2 - 200XP = +5 Friends Slots
Level 3 - 300XP = +5 Friends Slots
Level 4 - 400XP = +5 Friends Slots
Level 5 - 500XP = +5 Friends Slots
Level 6 - 600XP = +5 Friends Slots
Level 7 - 700XP = +5 Friends Slots
Level 8 - 800XP = +5 Friends Slots
Level 9 - 900XP = +5 Friends Slots
Level 10 - 1,000XP = Earn 1 Profile Showcase (MAX 16) +5 Friends Slots
Level 11 - 1,200XP = +5 Friends Slots
Level 12 - 1,400XP = +5 Friends Slots
Level 13 - 1,600XP = +5 Friends Slots
Level 14 - 1,800XP = +5 Friends Slots
Level 15 - 2,000XP = +5 Friends Slots
Level 16 - 2,200XP = +5 Friends Slots
Level 17 - 2,400XP = +5 Friends Slots
Level 18 - 2,600XP = +5 Friends Slots
Level 19 - 2,800XP = +5 Friends Slots
Level 20 - 3,000XP = Earn 1 Profile Showcase (MAX 16) +5 Friends Slots

Conclusion:
As you can see there are many ways get more XP on Steam and level up. This is the first ever article I am writing so I hope I did alright :)