The Elder Scrolls games are somewhat unusual in that there are no experience points and you do not level in a traditional manner. Rather than receiving experience for killing monsters or completing quests, your level is increased by improving your skills.
For example, damaging enemies with a dagger or long sword increases your One-Handed Weapons skill whereas stealing items from enemies increases your Pickpocket skill. After a certain number of skill increases, the game gives you a level-up. Weapons skills (Archery, One-Handed Weapons, Two-Handed Weapons, Destruction magic) are increased by dealing damage with their respective weapons; kills are not necessary.
You can only increase your level by improving skills, regardless of whether you put points into perks or not.
As for your leveling speed, it is most likely because your friend branched out into leveling new skills. If you have played with a certain type of weapon (Two-handed, for example), it takes progressively more time to level that skill. Your friend probably decided to level a different skill and thus his level increased more quickly.