Why would u play the mode? It's just casual
Because I'm a sucker for roguelites. I have hundreds of hours on Slay the Spire so this is my gig.
I got Kurt Ashfallen and want to use him in Felwood in the demon area. The problem is he's level 1.
How do I level mercs the fastest? Is it to bring then along other, high-level mercs, on missions so he gets the passive exp, or do I need to do lower level missions with him for better exp?
You've just answered your question yourself. Bring Level 1 heroes along the Run against the highest level opponents you can deal with with your strongest Heroes. Obviously don't use them, just farm the passive XP.
That way every hero can be leveled up to Lvl 30 quickly, but unfortunately that's far from enough. But you will see later... xD