To level up Heroes and Schematics, you can select the Schematic or Hero and using the “Upgrade/Inspect” option. This will give you the option to level up the Hero or Schematic, using your available Hero or Schematic XP.
Evolution of Heroes and other Schematics:
Evolution requires multiple things in order for a it to be done.
You will need to have the node unlocked in the Skill Tree (there are different nodes for melee and ranged weapons, as well as Heroes, Defenders, and Survivors) but can be found starting in Skill Tree Tier 2:
The level of the item will need to be maxed out (leveled up to level 10 if 1 star, 20 if 2 stars, etc).
All items required for the Evolution will need to be met:
Anything missing will show, including (as you can see) missing the required nodes in the skill tree.
Evolving will unlock additional abilities, or alterations on what you’ve evolved. For example:
For example, this Dragon Sniper Rifle is currently level 10/10. This Schematic has the first two of the Perks unlocked, because it is at Schematic level 10. When this Schematic gets evolved, and leveled up to level 15, it will unlock the +18% Fire Rate perk.