The Legion expansion introduced level scaling to World of Warcraft, with mobs in its zones scaling in power based on player gear. This allowed players more freedom in where to quest but it also affected how powerful they felt, as their ability to quickly take down lower level enemies was greatly diminished as well.
The system was eventually implemented across all content in update 7.3.5 and, with some tweaks, continues to be in use for Battle for Azeroth. With artifacts gone and people actively leveling again, said power issues were quickly brought up again as well however, with some enterprising Redditors even finding that unequipping high level gear will decrease the time it takes you to kill enemies.
Player versus player, our area of interest, is no different. The way the system currently works is that you are shown the expected damage numbers when hitting someone of a different item level, but the amount that’s actually applied is modified based on the difference between the two of you. In instanced PvP it works similarly but everyone starts at the same base item level and gets a percental tweak in stats based on every level equipped above that, which is why people tell you not to focus on stats but on item level for your PvP set.
It’s all a little opaque and, while it’s nice that lowbies can’t just get one-shot by someone in all Mythic gear, it does raise questions of balance. To accommodate complaints to that effect, Blizzard has now released a hot fix to at least widen the power gap a bit between players in the level 110 to 120 range. Considering that these issues have, to some extent, been lingering since last expansion this hardly seems like it’ll be the last word on the matter, but time will tell.