Wait... from the sounds of it, you're just opening the file in the level editor? Or the main game?
Follow these instructions:
1) Open the level editor.
2) Find your level, click on it, and click ok.
3) Now, go up to Level on the things at the top of the level editor.
4) Once you've clicked on it, click "compress"
5) Choose wherever you want the .bin to be, and then click "Save".
6) It should say "Compressing! Please wait!
7) Now, once it's finished (It will say Finished!), click ok, go to Knyttlevels.com, and click upload file. Locate where you saved it to, and click on the .bin. Should work from there.