function remove_previous_download_tags( $user_id, $tags ) {

    // If Level 2 is applied, remove Level 1

    if ( in_array( 'Level 2', $tags ) ) {

        $remove = array( 'Level 1' );

        wp_fusion()->user->remove_tags( $remove, $user_id );

    }

    // If both Level 2 and Foo were applied at the same time, remove both Level 1 and Bar

    if ( in_array( 'Level 2', $tags ) && in_array( 'Foo', $tags ) ) {

        $remove = array( 'Level 1', 'Bar' );

        wp_fusion()->user->remove_tags( $remove, $user_id );

    }

}

add_action( 'wpf_tags_applied', 'remove_previous_download_tags', 10, 2 );