That was like 1 of 2 battles in the entire game where if you over leveled, you would fight monsters that were at your level. And as you know, monsters at higher levels got stronger, but players at higher levels only knew more abilities, and they weren't necessarily stronger for it. To be fair, once you had a coral sword available to you, most equipment would suffice for battles, but even super gear would sometimes leave you fucked if you were dealing...with CHOCOBOS. Seriously, chocoball and chocometeor were so fucking ridiculously strong...I've seen Ramza at 99 on squire with the super escutcheon and maximillian and the best helmet that I forget get 1 shot by a chocoball.
On the other hand, Chocoballs/meteors/cure were all they had. After that, they had to rely upon raw stats/innate abilities to keep up with your Teleporting Wizard Samurai or your resident Thunder God. As for your Ramza, you probably had awful compatibility with that Chocobo's balls, which is probably why he reamed your sorry ass. Remember; Brave, Faith and Compatibility means more for surviving an enemy's attack than equipment and levels (since equipment and levels only add HP and in the case of the former maybe add some resistances or a fixed buff, or in the case of the latter alter some base calculations slightly).
Honestly, Level only really matters for the main storyline since those fights were fixed. What you didn't want to deal with was characters who were grossly underleveled since they would be missing the odd point in Speed or AT or MT and a bunch of HP/MP which sort of was a big deal until you had abilities to compensate; and if you didn't have the EXP, you probably didn't have the JP either. Its why Gained JP Up is almost mandatory for the entire game, since that's the real deal maker/breaker.