Yes, the paradigm is slightly different.
Although “outline” paragraphs internally use the list machinery, there are distinctive “exceptions” to cope with the semantics differences.
In standard lists, you Tab or Shift+Tab for that. In “outline”, you change the paragraph style, i.e. you explicitly define the level x with Heading x.
Alternatively, open the navigator panel (F5). Select your chapter or section in the Headings category and use either promote level/demote level (with single horizontal triangles) or promote chapter/demote chapter (with double vertical triangles) buttons. The first pair operates on a single level. The second pair ensures that the selected level and all subordinates levels will be consistently promoted/demoted, i.e. they will kepp the same relative dependency.
A list is considered an atomic unit. In principle, you won’t find other paragraphs intermixed between the items other than unnumbered or unbulleted items. Consequently, there is a single paragraph style associated to it. Only the number/bullet differs in levels.
This may be considered a limitation if you want/need level 2 to be printed in smaller size than level 1, but that’s how it is implemented. The ugly work around is to switch to another list for level 2.
Every outline has its own paragraph style Heading x because it is customary in typography to set levels differently. This is the reason why outline layout is not a standard list (single styled) in LO Writer.
To answer your question, use the navigator panel to promote/demote entire parts of your document à la M$ Word and tune appearance of your outline through Heading x paragraph styles and Tools>Chapter Numbering for the kind of level numbering.
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