Once you get the power level to max, than you will gain something for that one weapon or torso.

For legs and weapons, each power level will give you +1 damage.
For torso each power level will give you +5hp.

If you fuse up your mech quite a lot you'll find all your weapons will get a +5 damage each hit (or more, just an example! ). It doesn't seem much, but if you use your weapons with +5 damage 20 times in a game (which happens in competitive games) you're +5 damage for these weapons will add up to an extra 100 damage for that game that you originally wouldn't have had.

Of course the higher the power level of an item, the harder it gets to get it's power level up so it gets harder and harder to make one weapon stronger.

Another thing to be very careful of with fusion is making sure you don't raise your level too much. Once your weapon gets to power level 4 it will raise a level (say a level 15 weapons will now become a level 16). Then for every 3 power levels after it will raise another level (so level 4, then level 7, then level 10 etc... will raise the level of that weapon by one). Make sure you take care with fusing weapons by not making your level 15 mech (an example) a level 18, because you've over-fused one item.

Wuuuut?! Awesome!!