All contracts, quests, armor and swords in NG+ have levels way above the original game.
This is an example of my confusion. I have a master blade equipped with many features
as well as three runestone slots. In my inventory I have a common blade with no features
or slots BUT its rated level is higher than my equipped blade and the green number indicates
the extra damage it inflicts. So which blade is superior? Higher level vs special features?

New Game Plus (I hate it) makes all previous equipment irrelevant. Start again with your equipment, and go for maximum damage ouput initially; work your way up to adding runes and stuff, many of which you may already have via carry-over.

They certainly messed around with the levels. I'm on level 55 and crafted equipment that was close to this level based on the green levels shown on the left of the screen when an item is highlighted. Only afterwards did I discover that these levels
are the old levels and the NG+ levels are shown differently on the right side of the screen, like 20 levels higher, even more.