Surely that means once I get too strong the game won be a challenge anymore?
No, there is always something challenging for you. Your opponents won’t magically get stronger to match you, but they can always get more numerous. As you gain reputation your enemies will take you more seriously, they might even send a whole army after you! There are also more dangerous locations to visit, parts of the world where no man dares to venture, parts of the world that are totally war torn. Also your responsibilities increase, do you use your strength to change the world, or protect something? You could bolster a losing faction in a conflict, or you could just make a lot of powerful enemies. There’s more to this world than just scaring off bandits and you are going to need all the strength you can get.