Not sure about the zero, but inbound means that the bomb/warhead/missile or whatever it is that has been fired at them is coming towards them; 10 o'clock refers to the position of the hour hand on an analogue clock - so from the reference point it is ahead and just to the left - and level means, I assume that the flight path is level and even, that it isn't arcing or following an erratic flight path.

Zero was a type of enemy aircraft