When your opponent Normal or Flip Summons a monster that has a Level: Target that face-up monster; Special Summon 1 "Clone Token", with the same original Type, Attribute, Level, ATK, and DEF as that target. When that target is destroyed and sent to the Graveyard, destroy this Token.
Maybe they fixed it once but its not working again. I just did a duel against a random Duelist in the world and he summoned three monsters over the course of time where i had the card set, it never asked to be activated once. These were all normal monsters with levels.
Are you sure you didn't just miss the timing? It's a "when" effect, so it will miss the timing if anything else happens as a result of the creature being played (eg. if the creature has an effect that goes off when played, this card can never copy it because the effect will happen first and cause you to miss the timing.)
"Monster that has a level" means there are other monsters, like the not yet introduced XYZ, which don't have a level?
That doesn't mean anything. They're using cards already made before Duel Links was created that are able to be used in the Duel Links format.
Not only was "Cloning" introduced in 'Duelist Pack: Kaiba' in 2010, but since its release it's had three erratas — and the first three versions of it didn't have the "that has a Level" part of the effect.
So no, there's no guarantee that we'll be getting Xyz
In Auto Duel, when Cloning is activated, the computer will automatically play the cloned monster in defence position, even if this leads to it being immediately destroyed by battle by the opponent's monster. The Auto-Duel computer will not clone a monster into Attack position, even when it is a strong monster with higher ATK than DEF such as BEWD.