Hi Srikanth,
To answer your first query, the first level i.e. Country level is a very generic level, where if you put a country in embargo, it will be blocked for all transactions irrespective of the legal regulation. whereas level 2 & 3 are very specific to legal regulation level. If you want to understand this level, you should look from a perspective that you have 2 legal regulations in your system for embargo and you want to put a country under embargo only for one legal regulation and not for other. in this scenario you can use level 2 & 3 as you mentioned above.
For your second query, i would suggest you to create a new thread for the benefit of all to clearly distinguish in case one of your query is resolved, you can still mark the thread as answered. It will also keep the discussion simple. Thanks for your understanding.
regards,
Kul Vaibhav