Templates and Level Adjustments
Your current level and CR adjustment from your template are added together to determine your effective character level. So a 1st level character with a +1 CR template is considered a 2nd level character for the purposes of determining how much experience is required to reach their next level.
Characters that begin play with a +1 CR template receive a special condition known as "Nonheroic", representing their over reliance on the special qualities of their race. The condition remains until their current experience level equals or exceeds their effective character level (so when a 1st level character with a +1 CR template reaches 2nd level, the condition goes away).
Nonheroic Condition: The character is particularly unheroic and suffers a -2 circumstance penalty to attack rolls, saving throws, and skill checks. The character also reduces the saving throw DC of their abilities (including those gained from class levels, such as spells) by 2.