There is skill progression, but its effects are relatively minimal, and skills seem to go up very slowly, once you get to 20 or 30. I've been using bow to kite all sorts of things before I learned to parry, yet my bow skill just hit 10. I have the best equipment in the game, and my skills are still pretty low all around.

Aside from the skill progression rate and efficacy, I think it would help if they added bonuses and abilities to skill gains, as you hit certain milestones. Otherwise, I agree. Our characters don't really get anywhere. You can even start a new character and grab all the stuff from your old character's base, picking up where they left off. The lower skills don't even matter much.