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(community, feel free to correct me/clarify if I'm off on some details)
Yes, every skill loses 1 level per 20 gained (rounded out). You can check your current skill levels by pressing tab (kb/m) or Y (controller) to bring up the inventory UI and clicking on the three-triangle symbol on the upper-right corner of the screen.
It's up to personalities. Some people like ultra hard core death games where you lose everything,
In my personal preference I would enjoy the death mechanic more if it meant it restricted the next level of progress by a negative amount rather than losing a level. From a maths perspective it can end up being the same effect or even worse depnding on how it scales but from a brain level dopamine reward system it would be more enjoyable. Rather than losing progress you've already made which negates all that effort instead it means to progress past your current point you need to put in more effort.
I think the difference between the two is key when it comes to motivation.
Actions have consequences. What a shocker.
Not saying I don't get annoyed when it happens but it cuts down on the yoloing. Or should.
5% of your skill level, not of max level or progression.
ie: if your skill was 20, you'll lose 1 level. if your skill was 50, you'll lose 2.5 levels (go down to 47, with 1/2 the XP required for 48).
This happens for every single skill you have when you die.
ALL skills go down 5% on death. Now ya know