[...]
I don't see the players needing to know what skill total or level that shop keeper is,
How common or easy to make his items are for the general NPC population they will have to know (for my style of play). If an item that requires a 15th level alchemist in a world where there is essentially only one 15thlevel alchemist is buyable there, then the shopkeeper will know how to contact that alchemist - but if every 35-year-old alchemist is 15th level, then a 15th level alchemist obviously isn't the one rare individual the PC's are looking for. So I need to know that kind of stuff.
I am not advocating "stat out every NPC". I am just saying "I need to know how common certain types and levels of abilities are".
Moreover, when it gets into epic play, such as "the evil necromancer of Troos tries to take over the world, please, mighty heroes, lead our armies to stop them", I obviously need to know the composition of the necromancer's and the players' army - not only fighters and their average and median levels (troop quality), but also the availability of competent support - clerics to resurrect people, alchemists to enchant all the troops' equipment, healers, etc.
You're getting into combat related information here. In this you need to know skill totals and levels, but the players aren't privy to that until they confront it and get to judge for themselves based on the results of the encounter.
"How many of our clerics can resurrect the dead, and how often per day" is a very relevant question for a responsible general to ask. The same goes for "how many of our healers and lay healers can have you regrow a limb in what time".
I need to be able to give an answer to that. Even if nobody in the game world knows it, the information will be retrievable, and I as the GM need to be able to deliver it.
With me the question would simply be: Do I want them to find a level 12 cleric and, if so, how far do I want them to have to go or what do I want them to have to do to find it?
If it works for your group, then more power to you! But for me, as a player, that would smell bad - as if the GM wasn't letting me acting out my character in a believable world, but manipulating me into jumping through a hoop.
And of course, I need to know if 15th level PC's are "mighty heroes" (who will be asked to lead armies), or just "barely competent adventurers". For that, I need to know what the rest of the game world is like, level-wise.
But you already know that if it's your own game. [...]
If and only if I have made up my mind about the level distribution question beforehand.
[...]
That is, of course, a very popular fantasy trope. [...]
I don't think there's any 'of course' about it. It's the GM's call how they want that to work.
I beg to differ. What is popular or not in our general western culture's fantasy literature and movies is not subject to GM fiat.
If you have 10 ages of 'modern' man that were able to make magic items then 9 out of 10 came from a previous age on average. It's simple math.
Don't you need to factor in how many items get lost per year (or age) to the forces of entropy (such as fire, malicious intent, the inevitable chasm where things get dropped into, etc...)?
[...] is a 15th level archmage from the days of old a former evil overlord, or a former captain in the evil overlord's army, or was he just a lab assistant?
Why create so much work for yourself?
Actually, it
saves work. I know the level of the PC's, I know what place that level has in the current world, and what place it would have had in the world back then, so I immediately know what kind of role the villain would have had - so I already know something about his story, his personality, and his motives, and thus his tactics.
What you want there is there. What level someone needed to be to do it is largely irrelevant if the actual creator no longer has any impact on the current age. Only what they created matters if it's still around.
A few years back, I ran a campaign on Middle Earth. The villain of that campaign was the dragon Rutaug, one of Morgoth's captains in the First Age (essentially, sort of a junior partner of guys like Sauron), who had been buried along with his company of First-Age-high-level-orcs when Morgoth's fortress fell, and who put himself and his subordinates into a magical stasis - to be awakened when something frees them from their underground prison, which a friend of the PC's, a dwarf and his clan, eventually did while digging for silver in the Iron Mountains. The campaign (which started by sneakingly freeing the imprisoned Dwaves, and then spread from the Iron Mountains over Rhovanion up into Dorwinion, and both the Mountains and the Sea of Rhûn, and ended in the Northern Wastes, where Rutaug had built and army) involved some fighting, both the dragon's minions and the dragon himself. From the start, I had an idea how powerful the dragon and his minions were, and plenty of opportunities to display the (initial) difference in power levels to the PC's without having them killed. Not exact stats in each and every case, but a precise enough idea to handle those NPC's convincingly. All I needed for this was to know where those NPC's came from, what they were back then, and what they were now, relative to the general population. The rest basically happened by itself - quite naturally, just because the initial conditions were well-defined.
I heard there are GM's who can just make this kind of stuff up on the fly so that it looks believable, though I've never met one. That's not me. I need some structure first, or it becomes too much work.