What is the level significance in XMP bursters and resonators?

I was hoping someone could explain the levels Ingress uses. For example, do L2 XMP bursters only take out L2 resonators, or can they take out L1 resonators as well?

Each level of XMP make the weapon more powerfull.

Each level of Resonator make it more resistant (and increase range of potental links).

Here you can find a table with the power of each level of XMP Burster (source) :

EDIT: Since 18 January 2013 there are some new range values :

Level  Range  Damage
-----  -----  ------
   1     42     150
   2     48     300
   3     58     500
   4     72     900
   5     90    1200
   6    112    1500
   7    138    1800
   8    168    2700

Or a nice image (Outdated for the moment) :

Here is a summary of the different levels :

Level  AP required  Max XM     Burster     Resonator HP  Portal Range
                            Damage  Range
-----  -----------  ------  ------  -----  ------------  ------------
   1           0     3000     150     42       1000            160 m
   2      10,000     4000     300     48       1500          2.56 km
   3      30,000     5000     500     58       2000         12.96 km
   4      70,000     6000     900     72       2500         40.96 km
   5     150,000     7000    1200     90       3000        100 km
   6     300,000     8000    1500    112       4000        207 km
   7     600,000     9000    1800    138       5000        384 km
   8   1,200,000    10000    2700    168       6000        655 km

To supplement @Cedric's answer, the decay rate is not known at present but is clearly not linear. Anecdotal evidence suggests a major difference between standing within a meter of a resonator vs 5m away and only a minor difference between 10m and 15m away. There's a reddit thread with discussions and a much more plausible graph of damage from WolframAlpha. It's not clear how they obtained this information or how precise it is but it corresponds much more closely with my experience playing the game than the linear assumption.

This shows two hypothetical curves for an L8 burster only, with the old range. The numbers may not be precise but the steep power law/exponential shape seems plausible for all levels.

From a physical point of view, conservation of energy would indicate a dropoff ~ r^(-3) because it is a 3 dimensional phenomenon (even if its effects are only registered in two dimensions). A frictional term would add something like e^(-r/r_o) which would generate something more like the attached graph. Though the game's logic is in flux, I think they will likely keep with the pseudo-physical interpretation because it will tend to "feel more natural" than a linear response.