Level Adjustment

Level Adjustment is a games mechanic native to Dungeons & Dragons 3rd edition, which has yet to resurface.

In essence, because different possible PC races have different levels of strength, Level Adjustment was brought in as an attempt to provide some form of balance; races with particularly strong benefits, such as Planetouched counting as "Native Outsiders" and so being resistant/immune to various common spells, would be treated as if they were a certain number of levels already before they could calculate their levels. Actually taking levels in a class was treated as multiclassing.

A good idea, in theory. In practice, most found Level Adjustment didn't work out, mostly because of the fact that while you were ahead of the rest of the party early in the game, the level adjustment didn't include crucial things such as Hit Dice, Skill Points or Save & BAB modifiers which added up in later levels, always putting you "one level behind" the other players, despite your fancy spell-like abilities or racial features. You would then struggle to catch up with them as they had less of an XP tax than you did.

Getting Around Level Adjustment

Pathfinder, which was based on 3rd edition, just said no to level adjustments. While the system did include powerful races, they were measurably comparable to each other using the "Race Building/RP" system, so it fell to the GM to either disallow overly powerful races to maintain group balance, but if necessary he had the tools actually change the mechanics of a particular race.

In both World of Warcraft: The Roleplaying Game and Monte Cook's Arcana Evolved series: the systems had quite a novel way of getting around racial imbalance. Namely by making all races similar in power to start with, but allowing the more powerful races to have their abilities unlocked by taking actual levels in their specific racial-class. Therefore this was "true" multiclassing that came with the benefits of hit dice, skills and so on, and not some imaginary level that incurred a penalty. It also meant that players could choose whether or not to take those levels, particularly if it interfered or benefitted their class progression.