With the little camper pictured in your sig, it doesn't really matter.
You're not overweight or overloaded by a long shot (unless you have a BUNCH of heavy stuff in the nose of the trailer).
Level or close to it is preferred, but only really matters if you have a tandem or triple axle on torsion suspension. Torsion suspension doesn't equalize between axles like a leaf spring setup therefore in order to get equal load on the axles you have to be level.
Personally I'd get a little higher hitch to level it out just for appearances sake and maybe easier to level up when camping.
If you tow multiple things, some sort of adjsutable height hitch is nice so you can adjust accordingly.