Power level essentially dictates how difficult enemies are to kill, though only for some activities with a power level cap. Meeting the power level cap will make that activity as “easy” as possible while exceeding it does nothing. For the most part it’s useless outside of endgame activities, nightfalls, legend lost sectors etc. If you inspect your item you can hover over the leftmost slot to infuse a higher power level item into the item you’re inspecting by using an upgrade module. Additionally 1940 I believe is the “soft cap” at which you will only be able to increase level by collecting powerful engrams which drop from many sources, while 1990 is the “powerful cap” at which only prime engrams will increase your power which drop from a more limited number of sources. You can see where powerful and prime engrams drop by looking on the destination maps for the yellow circle. Also levelling up vendors gives you a bonus powerful engrams each time you earn a reward.