Skills level by being on your active ability bar when you earn XP. The XP can be from any source (e.g. monster kills, exploration, turning in quests, completing dolmens, etc.).

It sounds like you and your friend were grouped up at the time he killed the mob. When you are grouped with someone you get XP and loot for things they kill even if you don't actually participate in the fight (n.b.: I do think there is a distance requirement for this shared XP/loot to occur, but I'm not sure how close you actually have to be to your group for it to happen).