I got to forest lv 2 and I'm now encountering enemies with 600hp that basically one-shot my wolves while I do next to no damage to them. How do I defeat them? Should I just grind on lv 1 until I get better offensive skills or something?

I believe that the enemies that your talking about ( a dragon and some humanoid thing correct?) are actually prey so you don't have to defect them to level up ( so they can just be skipped). Prey you don't have to defect to level up your explore level while predators you do, if the button to fight the animal is "hunt" it's prey and can be skipped , if it's "battle" then you must defect it to level up ( explore guide link for photos and more details )

Oh thanks! I did check the guide but apparently glanced over the difference between "hunt" and "battle" lol