1. level
i'm assumming the preset # on level box is the char current fishing lvl. changing the number to higher will make fishing harder? better chance of getting good fish? no effect? (i don't see the different and the fish are usually lower stats)

2. fishing rod durability
what does it do? reel bar will go down faster than rod bar? less chance to break it if you don't snag counter at right time?

1. The tier of fish only changes every 5 levels. 5, 10, 15 , etc. So unless you change it higher to one of these, it wont matter. Personally I never change it. I find it much easier just to keep doing +1 of my prof.

2. Durability effects the bar where it says:

Keep your rod's bar up or it will break.
| - - - - - - - - Fishing Rod - - - - - - - - |

As you know, if it goes down all the way your rod breaks. So the higher the durability, the less often you need to release line due to it going down too fast. At higher levels even if you dont mess up at all, you will sometimes need to run.

nice!! thanks for the useful info!!