What do Steam Profile levels do?

As you can see my Steam profile says I’m level 20:

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What exactly do levels do? Do they provide any sort of benefits? I’ve noticed the following as well:

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Some of the other users have different colored circles around their levels. Do they get additional benefits that other lower levels don’t get?

Answer

The higher your level the more “showcases” you can add to your profile which includes:

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You’ll want to join the Steam trading card group to level up your profile.

Joining the Steam trading card group is no longer required.

On May 15th, 2013 the Steam Trading Card system went into Beta. In
order to gain access to the beta, users must join the Steam Trading
Cards Group on Steam and will then receive an invite based on the time
they joined. Being a part of the beta will change the way your profile
looks to the new updated style.

From the Trading Cards FAQ:

What is my Steam Level?
Your Steam Level is a summary of your badges and shows off your trading card collection and participation in Steam events. Each badge earned increases your XP, and every 100 XP gives you an added Steam Level (at least to start).

How do I add a showcase to my profile?
Once you reach Steam Level 10 you can pick and customize a showcase from the profile edit page. Each 10 Steam Levels earns you an extra showcase, i.e. two showcases at Level 20, three showcases at Level 30, etc.

What are the direct benefits of my Steam Level? You get more options
to customize your profile, and the maximum number of friends you can
have on your friends list increases.

Attribution
Source : Link , Question Author : childe , Answer Author : k1DBLITZ

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