Superheroes wouldn't be superheroes without a sidekick to keep them company and help them in their adventures. Twilight Heroes provides a couple of different ways in which you can acquire a companion for your character: temporary companions and a permanent sidekick. Because of the powerful nature (and often very strong personalities) of companions, they don't get along very well with each other, so you can only have one of each (one temporary, one permanent) with you at any given time.
Permanent sidekick—Partway through the game you'll have the opportunity to acquire a permanent sidekick, who will stick with you indefinitely. This sidekick starts out unskilled, but can learn or acquire a number of additional skills, though he or she can only actively use one skill at a time. Unlike temporary sidekicks, there is no timer for your permanent companion.
Skills and level caps—As everyone knows, sidekicks rely a lot on their heroes for guidance and influence. You're in charge, naturally, and they're around in a supporting role. This means that their abilities and effectiveness depend heavily upon your leadership. They can only exercise their skills to the extent of your abilities as a leader. So, in a practical, mathematical sense, as you gain levels your sidekick becomes better at what they do along with you, and if you lose levels (by transmogrifying your talisman, say, and going back to level 1) then your sidekick's abilities suffer in a similar fashion. (Put bluntly, your sidekick's abilities scale with your level.) However, most skills have a limit to their usefulness, beyond which your sidekick simply can't get any better. This is listed as the level cap for that skill. Once you're beyond that cap, your sidekick will have maxed out his or her ability to perform that skill, and they won't be able to improve any further.
Example: say your sidekick has learned Karate, which caps at level 20. This means she will become more effective as a fighter each level you gain, up to level 20. Beyond that, she's already as good as she can get, and gaining further levels won't increase this ability.