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So I am level 42 now, what if I party with a level 1 player who is just beginning? If I stay near him and don't kill mobs, will he get penalties anyways (don't care about penalties to me)? And if there are penalties, how do they work, compared to if he would play alone? I've read the wiki page, but I still don't understand this situation.

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Experience is shared when you are near each other(roughly two screens of distance), it doesnt matter if you are killing mobs or not.

According to wiki each player's share is calculated: 

(CharacterLevel+10)^2.71 / the total of all players' shares.
  • Level 1 character share: (1+10)^2.71 = 664
  • Level 42 character share: (42+10)^2.71 = 44706

TOTAL of all players share is 45370, i.e.

  • Level 1 character share: 664 / 45370 = 0.014 = 1.4% of the exp
  • Level 42 character share: 44706 / 45370 = 0.985 = 98.5% of the exp

everything according to the wiki: Partying

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