There is no level. You get chests by performing well in games. If you or a friend your playing with gets an “S” or above rating for the game, you get a chest. The catch is you can only get 1 chest a season with each Champion.

For example, you have a really good game with Garen. You get an S and therefore a Chest for performing, you may not get another Chest with Garen until next season. However you can still get countless others play playing other champs.

As for buying, you cant buy them with blue essence, however you can always actually pay real money for them in the store whenever you want.