Why is there difference of JLPT level for Kanji and its wording?

For example, the kanji, 輝

and

The kanji level is N1, but the wording for the kanji is JLPT N3, can I know why are there difference? Is it because depends of usage?

Because it's a common word but a more advanced kanji. So if it's on the N3 test they should provide furigana to assist with the kanji pronunciation. For example, see here where they gave the pronunciation for 鍋 so the test taker is expected to know the word but not the kanji.