I won't say "RTFM", because some folks get touchy about being asked to read the documentation for the complicated equipment they're using (see previous invocations of "Read the Manual" responses in many other threads), but from the Skyview Pilot's User Guide, Revision P, Chapter 8, Page 8-1, it says, under "Level Mode":
The Autopilot’s Level Mode (or Straight and Level Mode) will immediately attempt to reach zero vertical speed and a roll angle of zero. It will not attempt to fly the aircraft to any previous altitude or track and it will not respect any bug inputs. When activated, Level Mode will cause the Autopilot to engage if it was not already engaged.
So your system is doing exactly what it's supposed to do - maintain a VS of "0". It's not closing the loop on any particular altitude, so your altitude may float a bit, either up or down.
If you want to hold an altitude, use the ALT button, not the LEVEL button.