Everything suddenly tougher?! WTF?!?

Like the title says.

I just picked up the game yesterday, and it has been steadily handing me my ass. My first 2 hours of play were simply kill-die-reclaim-repeat.

I slowly got stronger, bought some new armor, upgraded my weapon.

Finally, I managed to bring down the first boss. Yay!

I go to the Dream, reload and restock.

Oh look, everything has respawned. And it's all taking 4-6 hits or more to kill, as opposed to the 2-strikes-and-it's-dead method I was employing before.

Now, everything's back to smearing me across the ground.

Am I not understanding how something is supposed to work, here?