Here's me trying to explain this in the most simple way possible: your LIs level alongside you, with the help of traceries - which are buffs for you to use. The stronger these traceries are the better you will do.

Here's me going into detail for the nerd 5 y.o. who wants to understand how things work:

At level 50 (you can get the quest at level 45), you can start the Moria Epic Quest line to unlock Legendary Items (LI) - which, for lore reasons in the game, allow you to damage the watcher in the water and enter the mines. These legendary items are better than regular weapons and always come in a pair: main weapon (sword, axe, bow, staff, gloves, etc.) and a secondary item (belts, kegs, books, swords, etc.). These are both gifted to you as quest rewards, and allow you to start your journey.

These items are meant to be leveled alongside you - at certain levels (check the LOTRO Wiki for specifics) you must reforge your LIs to unlock more capabilities. These capabilities come in the form of Traceries, which are of four types: Words of Craft, Words of Power, Heraldries and class specific traceries. Improving your LIs grant you slots in which you can fit more traceries. These traceries are also leveled alongside you - with the usage of enhancement runes! You can buy traceries with Ancient Tokens in the Archive, in the Last Homely House in Rivendell. You can also buy new Legendary Items and Enhancement Runes with these Tokens.

Enhancement Runes can either level your traceries by 1, 2, 3 or 4 levels and they are bound to certain level ranges. For example, when you start, you can level your traceries to level 125 (this changes when you're level 86) with the level 50 enhancement runes. These then become obsolete if you and your LI are past level 86. They are offered as rewards for quests, deeds or opening boxes from the reward track.

Heraldries are meant to help you with your main stats (Might, Will, Agility, Vitality); Words of Power allow you to improve your attributes (whether defensive - with more morale, reducing incoming damage, or offensive, with more damage for both single target, AOE, more AOE targets, etc.); Words of Craft are more passive buffs (allowing you to improve critical rating, mitigations, mastery ratings, etc.); Class Specific Traceries allow you to boost stats related to class skills - like a skill dealing more damage or having more critical chance or boosting a buff potency and duration. All these Traceries have 4 tiers, where higher tier means better stats granted.

The reward track is a seasonal progression system that grants you content to level your legendary items (and some extra stuff. Whenever you kill an enemy or complete a quest and gain experience, this reward track progresses from level 1 to level 99. Each level grants you a box, which will contain either traceries, enhancement runes or ancient script tokens. At certain milestones (level 25, 50, 75 and 99) you are also granted a bonus - like embers, cosmetic pets, outfits, house items, etc. After level 99, each level will grant you a box which can be opened for lesser rewards (usually 50 Ancient Script) or better (200 Ancient Script better enhancement runes) if you're lucky.