how do I level up my farm and why do I give the village resources? what does the points earn me?
At the start, the upgrades are more options. Things like giving you more fields and the ability to raise bugs, mushrooms or honey. Later it gives you greater yields, I think. You upgrade by progressing through the village quests. As you go, you'll get more requests that'll upgrade your farm and give you different masks to outfit your Shakalakas. You get resources by hunting down forest monsters.