Observe that $x_1=1$ and $x_2=\dfrac{1}{\sqrt{2}}\left(1+\dfrac{1}{\sqrt{2}}\right)>\dfrac{1}{\sqrt{2}}\left(\dfrac{1}{\sqrt{2}}+\dfrac{1}{\sqrt{2}}\right)=1$.
Thus, $x_2>x_1$. In general, we also have $x_n=\dfrac{1}{\sqrt{n}}\left(1+\dfrac{1}{\sqrt{2}}+\dfrac{1}{\sqrt{3}}+\ldots+\dfrac{1}{\sqrt{n}}\right)>\dfrac{1}{\sqrt{n}}\left(\dfrac{1}{\sqrt{n}}+\dfrac{1}{\sqrt{n}}+\dfrac{1}{\sqrt{n}}+\ldots+\dfrac{1}{\sqrt{n}}\right)=1$.
Thus, $x_n\geq 1$ for all $n\in \mathbb{N}$. Also, we have,
$x_{n+1}=\dfrac{1}{\sqrt{n+1}}\left(\sqrt{n}x_n+\dfrac{1}{\sqrt{n+1}}\right)=\dfrac{\sqrt{n}}{\sqrt{n+1}}x_n+\dfrac{1}{n+1}$.
Is it true that $x_{n+1}>x_n$?
Edit : Thanks to the solution provided by a co-user The73SuperBug. Proving $x_{n+1}-x_n>0$ is equivalent to proving $x_n<1+\dfrac{\sqrt{n}}{\sqrt{n+1}}$. This is explained below :
\begin{equation} \begin{aligned} &x_{n+1}-x_n>0\\ \Leftrightarrow & \dfrac{\sqrt{n}}{\sqrt{n+1}}x_n+\dfrac{1}{n+1}-x_n>0\\ \Leftrightarrow & \left(1-\dfrac{\sqrt{n}}{\sqrt{n+1}}\right)x_n-\dfrac{1}{n+1}<0\\ \Leftrightarrow & x_n<\dfrac{1}{(n+1)\left(1-\dfrac{\sqrt{n}} {\sqrt{n+1}}\right)}\\ \Leftrightarrow & x_n<1+\dfrac{\sqrt{n}}{\sqrt{n+1}}. \end{aligned} \end{equation}
The sequence is indeed increasing. Using what you have left off we need to prove: $x_{n+1} - x_n > 0\iff ...x_n < 1+\dfrac{\sqrt{n}}{\sqrt{n+1}}$. We prove this by induction on $n \ge 1$. Clearly $x_1 = 1 < 1+ \sqrt{\frac{1}{2}}$. Assume $x_n < 1+\dfrac{\sqrt{n}}{\sqrt{n+1}}$, we show: $x_{n+1} < 1+\dfrac{\sqrt{n+1}}{\sqrt{n+2}}$. Using the recursive formula you had above: $x_{n+1} = \dfrac{\sqrt{n}}{\sqrt{n+1}}x_n+\dfrac{1}{n+1}< \dfrac{\sqrt{n}}{\sqrt{n+1}}\left(1+\dfrac{\sqrt{n}}{\sqrt{n+1}}\right)+\dfrac{1}{n+1}= 1+\dfrac{\sqrt{n}}{\sqrt{n+1}}< 1+\dfrac{\sqrt{n+1}}{\sqrt{n+2}}$ which is clear because $n(n+2) < (n+1)^2$. Thus by induction $x_n < 1 +\dfrac{\sqrt{n}}{\sqrt{n+1}}$ and in turn implies $x_{n+1} > x_n, \forall n \ge 1$. Thus the sequence is increasing.