Each rarity has a different maximum level cap (60, 65, 70, 80, and 90, for 1-5 stars respectively) but by using Holy Grails, any servant's level cap maximum can be increased, and anyone in theory can be level 100. They're a very limited resource though, so grails are typically saved for your very favorites. That said though, anyone taken to their rarity's natural cap will be of quite a fair strength, so no worries on being too underpowered due to the different caps.
3 star servants are the highest you can roll on friend point rolls and those will all have a maximum level of 70, and they're definitely quite capable of handling themselves. The 1 and 2 stars still all have their own uses too though, some of them actually outclassing 5 stars for what they do (Arash comes to mind for being hella good at farming, and Spartacus too)
Critical stars, you can think of each one as being a 10% chance for an attack to crit. All of the stars you have are distributed to random face cards per turn, and that's how the crit system works in this game. 10 stars will guarantee a crit if they all go to the same card, but you usually need more than 10 to force crits unless the character in question has a skill that increases their critical gather rate. Which makes stars more likely to go towards their own cards. If you happen to end up with 50 or more stars in one turn, every available card will have a 100% chance and the extra stars are discarded afterwards.