The weapons and armour of your warriors are enhanced in the smithy’s melting furnaces. By increasing its level, you can order the fabrication of even better weapons and armour.
An upgrade done to a unit counts for all units of that type in the village the upgrade is done. This means an upgrade done in village A does not count for troops coming from village B.
The level dependent attributes (such as construction costs and generated culture points) can be found here.
For the full table of construction times click this link for server with 1x speed and this link for server with 3x speed.