If your equipment is at level 4... can you not upgrade them further? That fact that all your characted are level 10 must mean that you have done a lot of dungeons - so hopefully you have also gotten a lot of gems, to upgrade good pieces of gear.
It is because as you progress into the new areas, the items that you get and can buy are generally improving. What this means is that likely your blue item was rewarded in an earlier area, but as you progress, that item is pretty weak anyways, so even the most basic items you get rewarded later on in the game are better. I…