This is not Lu Ye being blindly confident, believing he could defeat enemies several levels higher than himself. From the moment he left Qingyun Mountain, on his journey, Lu Ye had killed many cultivators with higher cultivation than his. Just during the Dragon Spring Meet, there were five or six Level 5 realm cultivators who died at his hand.
The two spirit runes, Defense and Sharpness, could greatly enhance his offensive and defensive capabilities, narrowing the gap between his cultivation and that of his enemies.
So, defeating an enemy one level higher was still no problem for Lu Ye.
Although he didn't know what exactly had happened to Dong Shuye, this confrontation made Lu Ye realize an interesting fact: Dong Shuye only had Level 6 cultivation now!