How do Illusion skills really determine level in skyrim?

So, Ive been searching this up, Mostally because I want to do a little Pseudo-pacifist playthrough of skyrim. (You know, Illusion skills, stealth, maybe hand to hand if it comes to it and just pretend that Im just incapacitating people, Deus Ex style.) But I was always confused with this, and was with Oblivion too. How do the spells work? They all say "Creatures and people up to level X flee" or whatever. Does this strictly mean I can only use that spell to level 8? After I get to level 25 or whatever it is, do illusion spells just become useless? This always seemed silly to me. Hoping reddit can help me out.