is your characters reaction to what is happening in the fight. emotion level only exists within special encounters. what it does is every time something major happens like you winning/losing a clash you gain either a negative or positive emotion token. when you gain a certain number of tokens you level up your emotion level and gain another action per turn (max of 3 actions)
chart for leveling emotion up

0 to 1 require 5 tokens
1 to 2 require 7 more tokens
2 to 3 requires 10 more tokens
3 to 4 ten more
4 to 5 ten more

aside from the extra actions from emotion level 2 and 3 the main benefit of leveling emotion level is the buff cards you can get. upon leveling up depending on what tokens and how many you have (positive or negative) you get a choice of one of 3 cards that each have their own effects.