First a simple example:
* WOW (worldofwarcraft.com) - level based combat
* VO (vendetta-online.com) - skill based
Now matter what you do, there is a higher chance of hell freezing over or world peace tomorrow then you beating a level 80 character with your level 20 character. PERIOD!! Hell, there's pretty much no chance of beating anyone more then a level or two above you. This logically implies that the combat model is based purely on levels and not on skill. I'm not gonna argue if WOW actually requires skills because it doesn't matter, unless you're a level 80 like all the other endgamers there's really absolutely nothing you can do to beat them, no matter how good you are.
When I first tried this one I leveled up all my licenses (these are used to unlock better ships/weapons), when I finally did you know what? I got blasted by someones alt, he was in a free ship with free guns vs my super leet top-of-the-line technology. It's not only possible to kill someone in a bigger/badder ship then the one you are flying, it happens every day! And you don't need a large possy of noobs in with free ships to do it, you just need skill that comes from experience and practice and a single ship.
Don't get me wrong, even in a skill based game it's very unlikely (arguably impossible) to just jump into the game and attain this skill in minutes and start killing long time players. Skill, in the case of VO anyways is twitch reflexes and 3d orientation/strategy, much like flying a real plane or driving a car. The first time you jump behind the wheel of a car and race against a seasoned pro you'll lose, aside some sort of freak-of-nature cat-gene reflexes there's nothing you can do about this.
The real difference between skill and level based games, skill based games you practice to get good, level based games you practice to get levels. Levels are like a fake skill reward for practice that anyone can get, thus keeping the "skill" for that game based more-or-less on how much you've played it (or in the case of games like EvE, how dedicated you are with logging in and setting your account to auto-grind the next skill, funny game that one where you don't even really play to gain skills or levels), and not transferable to other characters even in the same game. Both types of games will end up with some grind, just one is a grind where you're guaranteed to improve (your level), the other is like practicing a piano for years (you will get better, but some people are just more capable in the end then others). I think that's the real distinction between skill and level based, and also the reason level based games are generally more popular, that in a level based game anyone can become godlike to those less powerful then them (those that haven't played as long) while a skill based game not everyone is guaranteed to attain this level of power over others (you need to actually be godlink to appear godlike which is somewhat rare these days).