Ahhh... kiss...
If only the game kept the character progression tied to world exploration, things you find, good old times. Find a better axe, chop tree faster. Days when finding a better gun part made you happy. Getting a schematic which was rare was an event. Finally reaching the city at 0.0 was actually some sort of an endgame which could have been built upon.
Those were the days. ~(*I did not manage to find another game to play yet which would excite me as much as what this game used to be)
That's kind of like the Terraria model of progression.
For those who don't know, in Terraria character progression is almost entirely loot based. The only differences between a starting character and an end-game character are:
1) The end-game character has more health (& mana, since there's magic in the game) - but this is still indirectly loot based because raising these is done by consuming items that you've found (in the case of health) or crafted from found items (in the case of mana).
2) The end-game character has much,
much, better equipment - from a combination of found items, crafted items, and trader-bought items.
However, for this type of progression to work it has to be very carefully managed. Terraria does it masterfully - better than any other game I know - by having an extremely well designed set of gates in the game.
In Terraria's case, these are mostly based around boss battles. Defeating a particular boss will either have the boss drop materials that you can use to craft items that let you get to better content or have the defeat of the boss be the trigger for a new type of enemy spawning. The equivalent for 7 Days to Die would probably be tied to the questing system rather than bosses. Maybe there's certain items that only drop from radiated zombies, but radiated zombies don't start appearing till you've done a particular quest. Maybe the only way to acquire a Chemistry Station is to get it as a quest reward from a particular quest. Maybe there are items that the trader will only sell you after you've completed a particular quest. And so on.
And the balance comes in by having "gamestage" a measure of how far along the progression of special quests you've progressed.
Basically, you never go up levels and get better skills; but equally the zombies don't get harder over time. Instead you get access to better equipment as you progress through a series of special quests and the difficulty of the zombies you face increases on your progression through that same series of quests.