Can I farm low-level mobs for passive EXP?

You can but we'll advise against it. This is because the game employs a penalty system where the drops and EXP gains from mobs you've killed will be affected by your character's level. If you kill low-level mobs, you won't get anything; you have to make sure that the targeted mobs in auto-battle (can be set in the Offline Battle Management from the main menu) are within your level range. (at least 2 levels below you).