But in this case, "XP" doesn't actually make you more powerful. It doesn't make you hit harder. It doesn't increase your defense. It doesn't add new skills. It doesn't even unlock access to new missions, that can only be done by gaining reputation with a faction.Actually, in this case, it does.
Combat is the ONLY game mechanic where XP is used. Depending on what you are killing, you get a small amount of XP, which is then added to your combat rank. Once you hit enough XP, you level up/Go up a rank.
And unlike trading, where every credit counts, Killing a novice as a deadly won't reward you with any XP. Where as even as a Tycoon, trading for 200cr profit will still count towards your goal of becoming Elite.
Combat
Combat is one of the three archetypal pilot roles recognized by the Pilots Federation. Combat encompasses multiple sub-roles, such as Assassin, Bounty Hunter, Mercenary, and Pirate. Increasing Combat rank requires destroying other ships, and defeating pilots with higher Combat ranks rewards a...elite-dangerous.fandom.com
What it does, at best, is open up access to a few engineers, none of which have modifications that are exclusive to them. At worst, it makes NPCs more difficult to kill, especially if you cheesed your way up to that rank using an internet approved farming method.