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In season 1, episode 9 of the Pokemon anime (The School of Hard Knocks), a student named Joe is tested on the evolution levels of the Pidgey line. Does this mean that Pokemon in the anime do in fact have levels? Is this just a reference to the Pokemon games? Or is this something else?

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We can't tell what could be the reason, only Game Freak knows what they did, but here is an excerpt from the Anime FAQ in this website:

Levels don't exist in the anime. Not everything translates exactly from the game, and thus
the two are not comparable. Misty's poliwhirl evolved into politoed just from holding a
King's rock, even though you have to trade it while it's holding one in order for it to evolve. If there were levels, then pikachu would already be nearly unstoppable. Levels are put in the game to keep things balanced, like a game should be. The games do this so you don't get killed by the first gym leader, then coast through the game until the next one. Does it make sense for a gym leader to have level 10 Pokemon, and are outclassed by the regular trainers later on in the game? no. That's put in place to make the game transition well. The anime doesn't have to worry about this, and has no need for levels.

About Pikachu reset:

It's probably still a bit worn out considering it's usually used in the Pokemon league. It took on things like Dragonite, Regice, and Latios, so it's expected for it to be less than 100%. It's also to keep it from being overpowered, as it just took on very tough opponents.

Yes, and then they went back on it. The older episodes were when the did a retcon and retracted the idea of levels. Besides, even if we accept that there are levels, it couldn't be level 5 if it's using a grass move since Snivy wouldn't have any at level 5.
commented May 23, 2015 by DarkTyphlosion
edited Jul 10, 2018 by DarkTyphlosion

So, we can conclude that it was basically retracting theory in that episode, compared to what would be in the later episodes.
Hope this helps!

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Alright. That makes sense. Thanks.
No problem.