A generator engine is not inherently different from any other small engine. A few degrees off kilter certainly won't cause any problems. If it's level enough for a log splitter or pressure washer or lawn mower or whatever, the generator should also be all right. (Of course, if the ground slopes enough that the generator constantly wanders off due to its own vibration, you kind of need to do something about that.)
Leveling mainly is a concern to keep the oil in the right parts of the crankcase and, to a lesser extent, to keep the carburetor bowl filled to the proper level. There's nothing that would cause cumulative damage over time from small amounts of being out of level. Lack of lubrication, from being quite tilted, would of course cause rather rapid engine damage. The electrical parts of the generator will work at basically any orientation whatsoever.