Monster Level
Each player in the RPG has a level. For each level the player gets 10 points to spend on whatever skills they choose. To compensate for this, monsters will automatically get their level set based upon the lowest level player currently alive, and the wave number.
For invasion, the monster level = (LowestPlayerLevel * 0.34) + (WaveNo * 2), where WaveNo is 1 to 16. The monster level is set to the LowestPlayerLevel.
Monster Damage Bonus and Damage Reduction
Monsters do not choose different skills to buy. Instead, all the points they get are split equally between Damage Bonus and Damage Reduction. Since there are 10 points per level, a level 25 monster will have 125 Damage Bonus and 125 Damage Reduction. Note that although players are limited to a maximum Damage Bonus of 290 and Damage Reduction of 350, monsters do not have these limits. So a level 200 monster will have 1000 Damage Bonus and 1000 Damage Reduction.
How is Damage Bonus Used?
The general algorithm in the UT2004RPG is
Damage done = max(Weapon Damage * (1 + (DB - DR)/200), 1)
so for a weapon doing 100 damage, if the attacker's Damage Bonus is 200 and the defender's Damage Reduction is 50,
Damage done = max(100 * (1 + (200-50)/200), 1) = 175
In particular, if you have a high level monster with DR of 700, even if the player has maxed DB to 80,
Damage done = max(100 * (1 + (80-700)/200, 1) = 1.
(Edited to match Monster Mash server monster adjustment of 0.34)