OK so I’ve done a bit of fiddling and found a situation where I can see how it could be advantageous to have separate types of styles which is this: If you had a document that was mostly set to some Normal style but a few words were emphasized with an Emphasized style but then you wanted to change all the Normal paragraphs to some Normal2 style, that would overwrite the Emphasized styles and you would have to go re-select those words. In that case it makes more sense to me to think of styles as layers like in Photoshop (or like styles in CSS). In that approach there wouldn’t be special names for each style layer like paragraph or character style, just layers of styles where whichever layer is on top takes precedence.
Regardless, I just wish that the existence character styles was made more obvious when first using Writer. Since this feature is so different from most other writing programs most people are familiar with, I think it needs to be introduced to any new user. Maybe there should be a character styles drop-down in the main style toolbar right next to the paragraph styles drop-down too