Companions are a special type of NPC that can be recruited into the party on a permanent (or at least long-term) basis. Other NPCs can join too of course but they aren't as important. Companions typically have special skills and underlying motivations that make them suitable for the life of an adventurer. Not all companions are created equal. Some have a larger part to play and even have fate/resolve to spend. Not as much as PCs but more than lesser NPCs 😅
Companions do not track XP as PCs do. Instead, they start with whatever stats the GM deems them to have, and then develop at a slower pace than player characters do. Some of them have completed careers and are pretty advanced already. For example, Anna de Vedenza is a Physician (ex-Scholar), and Ulfberth is a Mercenary (ex-Berserker).
The best way to improve a companion is to interact with them. Learn their backgrounds, uncover their motivations, and help them accomplish tasks that matter to them. Each NPC has a little (or big) story arc that will unlock their potential. This interaction needs to take place over time when it's natural. It's not possible to just force some dialogue and be done with it.
Companions are generally inclined towards loyalty to the group but not all of them are equally loyal by nature. Treating companions well, giving them opportunities, and following their story arcs will generally improve their loyalty. Some companions like each other and will be more motivated by the presence of the other (A&A for example). The opposite is also true (Thesalva is not a great fan of Annika).
There are of course also XP rewards for PCs for following companion story arcs!
