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Material level is the level of the Material that drops from Resources. The higher the Material level, the stronger/more efficient the tool is. Generally items made from components with higher material levels have better properties. 

Currently the highest Material level is Diamond, and lowest Wood. 

Here is a simplification of how a higher Material Level of the components used for Crafting can effect the properties of the created Item: 

  • Combat weapons deal more damage 
  • Shields and Armor provide better protection