Hi Bella,
When you create a BOM and assign the BOM lines (sub items of BOM) and once you approve the BOM, it will show you the level zero in the BOM item and we can view this in item form > reference (tab).
BOM item will show you the LEVEL as ZERO and its BOM lines will show you level as LEVEL 1. If you have a Sub-BOM items assigned in the BOM lines, then it will show LEVEL 2 for those Sub-BOM items. like wise it will fallow the levels.
Sarathy