10 levels spreads the experience points too thin, hence the limit of 10 levels. There is a rather difficult formula used to distribute the experience points a fellowship earns. Experience is divided based on level and the amount of experience needed to gain the next level for each character. This ensures that fellowship members will all approach their next level at roughly the same rate. Broken down, this means that the closer you get to your next level, the less experience you gain.
Distance plays a factor in the distribution of experience points as well.
If you are more than 3 kilometers away from your group, you will gain very little experience and will provide very little to your group members. If you're teleported across the continent you essential are making almost 0 experience for the fellowship. Also, monsters you kill yourself will still give you the same fraction of experience no matter how far away from your fellowship you are. Finally, the issue of treasure in fellowships. There is no auto-split for pyreals so it is up to the group members to be honest with each other and share the loot.