But what do you mean completing the dlc too quickly?

If you plow through the story too fast you'll hit a planet that has a requirement. I believe it's an actual level one, like you need to be level 17 to do the final mission, so no one can do the DLC without hitting level, say 20, meaning it can't just do it.

Content difficulty is based on power level not level. The only thing it does that I can tell is block equipping certain gear.

Well, my understanding is that power level determines the equip level, so they're basically the same. It's why you can't make level 1 gear at 300 light. It will instantly become level 20 gear and you can no longer equip it.

I just don't see why there need to be two level systems, I've never seen it in any game.

Really? It's an extremely common RPG mechanic. Even playing through Assassin's Creed: Origins I see it. You need X level to equip Y gear, which has Z power. Ultimately it's the weapons power that matters, not your actual level. ESO and Borderlands also use systems like this, along with many others.

Anyway, the point is to usually limit your max potential power at any point in the game. It doesn't matter much in Destiny because of how things scale, but that is usually the reason.