Program that teaches kids Chinese characters
First of all, this is a great idea!

Naming

all and set are not good names, because they shadow Python built-in names. set is especially bad, because it actually contains a list, which is misleading.
Also, variable names in Python should use snake_case instead of CamelCase. For example "NotLearned" should be changed to not_learned.

The PEP8 command line tool can tell you these things, I suggest to give it a try!

Also, k is a very poor name for a random list of characters.

Compatibility

It's ok if you have a reason to stay on Python 2.x, but it's still a good idea to make your scripts Python 3.x compatible when it's easy to do.
For example, you could replace print something with print(something),
because the latter works in both versions, the former doesn't.

Bugs

The program has several bugs.

outof is not reset at the beginning of each cycle.
For example from the word set of People with 4 elements,
I "guessed" 3 correctly, got 75% score,
then in the next round I guessed 2 correctly so my score became 125% instead of 50%.
The fix is simple, move outof = 0 inside the loop.

Another bug is in the logic to level up.
In my previous example of getting 75% score,
this happened:


if set in NotLearned:
    # =&gt; true =&gt; moving set from NotLearned to Learned
if set in Learned:
    # =&gt; true, because the set was just moved to Learned
    if score &gt;= .5:
        # =&gt; true, I scored 75%
        # =&gt; moving set from Learned to Practiced
if set in Practiced:
    # =&gt; true, because the set was just moved to Practiced
    if score &gt;= .6:
        # =&gt; true, I scored 75%
        # =&gt; moving set from Practiced to LevelOne
if set in LevelOne:
    # =&gt; true, because the set was just moved to LevelOne
    if score &gt;= .75:
        # =&gt; true, I scored 75%
        # =&gt; moving set from Practiced to LevelOne



There's a problem with logic here.
Possibly you meant to use elif instead of some (or all?) of those ifs.

Reducing the number of lists


  I want to know if there is a better way to have fewer lists


The way you use the lists, is a bit strange...
From NotLearned, you randomly pick one of the lists (numbers, people or family), and that list will be used for the rest of the game:
words are sampled from this list,
and the list itself is moved through other lists: NotLearned -> Learned -> Practiced -> LevelOne -> ... and so on.

Instead of moving through NotLearned -> Learned -> ..., you could use a simple number to indicate the level, and increment as the user progresses.

Usability

Typing Chinese is problematic if you don't have a Chinese keyboard. I played the game by copy-pasting answers. It could be more interesting and more accessible to present multiple choices that can be selected by entering their numbers.

In each cycle of the main while loop, the words come in the same order. It would be more interesting if the order was randomized.
See the random.shuffle function.

Unused variables

Eliminate all unused variables, they are just noise.