Character progression is achieved by crafting weapons and armor out of the materials for each respective tier. Armor sets in Starbound provide additional hit points, energy and warmth in addition to defense.

A crafting table can be produced from wood planks, this is needed to produce a furnace and anvil. The Anvil requires 10 iron bars and is created from the crafting table. Each Iron bar requires 2 iron ores to be smelted in a Furnace. All metal bars will require 2 ores to be smelted with the exception of diamonds which require 4 ores to be smelted.

Iron Weapons and Armor can be crafted with the Anvil; however you need a full set of Copper Armor as the base for Iron Armor. Each Armor set requires 67 bars. So you need 67 copper bars and 67 iron bars to produce one set of iron armor, which will have a set name and appearance depending on race. It is currently planned that each set of racial armor will provide the player with some type of passive bonus but this is not currently in the game yet.

In order to craft Steel bars, Weapons & Armor you need to upgrade your Anvil to a Metalworking Station; this requires a boss dropped item called Molten Core. The Molten Core is acquired when the player defeats a Penguin UFO boss that is summoned using a Distress Signal. The boss summoner item is crafted at the crafting table, every boss in Starbound can be summoned multiple times, you just need to craft another summoner item.

The Metal Working Station allows players to craft the Starmap Upgrade Mk2 which unlocks access to the Beta Sector. Using the Starmap Upgrade Mk2 will also unlock several new crafting recipes, including recipes for Steel items & Inactive Robot which must be assembled from parts.
The Inactive Robot is the second boss which must be defeated in order to acquire the Processor item, which is used to craft Robotic Crafting Table at the Metal Working Station. In order to craft Steel Armor the player needs a set of Silver Armor to use as a base; so you need 67 silver bars & 67 steel bars to craft the 2nd Tier armor set.

Once the player has the Robotic Crafting Table they will be able to craft the Starmap Upgrade Mk3 which unlocks access to the Gamma Sector. Using the Starmap Upgrade Mk3 will unlock new crafting recipes that use Titanium. In order to craft Titanium armor the player needs a set of Gold Armor to use as a base; so you need 67 gold bars & 67 titanium bars to craft the 3rd Tier armor set.

In order to craft the Starmap Upgrade Mk4 which unlocks Durasteel crafting, the player must acquire a boss drop item called Dragon Bone. The Dragon Bone is dropped by a flying fire-breathing bone dragon, and the boss summoner item requires 50 titanium bars and some other items to create. The boss summoner is called Decoy Princess; the dragon's fire-breath creates burning patches on the ground which will instantly kill the player if you step in them.
Every Race starts the game with a food recipe that will give them the On-Fire buff, which helps you resist damage from the dragon's breath, this food item also heals the player. For example, Apex use the Banana Bread recipe.

Durasteel Technology is needed to craft the Survival System backgear item which creates breathable air around the player. The Survival System is needed to travel to airless environments such as moons and asteroid belts which can be found in the Alpha Sector and every other Sector. The Survival System also allows the player to breath underwater.

Using the Starmap Upgrade Mk4 will unlock recipes for Durasteel items including an item called Monster Lab. This Monster Lab is used to craft the final boss summoner item called Peanut Butter Trap, a drop from this boss is needed to unlock access to Sector X. It's notable that you do not need Platinum Armor as a base to craft Durasteel Armor in v. Angry Koala, even though there is a craftable set of Platinum Armor. So you only need 67 Durasteel bars to craft the 4th Tier armor set.

Armor sets above Durasteel only require the bars to craft currently and are crafted at the Robotic Crafting Table rather than the Metalworking Station.

In the Screenshot below you can see the Arena I setup to handle the flying boss fights. The Bone dragon can be very easily defeated with a hammer, the boss is summoned on the left side of the wall and you stand on the right side and hit it through the gap. I suspect that the developers need to do something to make this fight a little harder. The UFO boss will crash through any blocks you try to build around it but generally it won't destroy wood platforms. Also the Robot can not attack you through a gap that is 4 blocks high, so long as its unable to jump over the wall, that's the minimum height in blocks that you can walk through.