Short circuit protection for digital input
The other side of the SW1 is connected to GND, that means LEVEL is open or connected to GND. When the LEVEL is open, that part of the circuit is high impedance. The internal pullup resistor of 50k is still a high value. I suggest to add a resistor of 4k7 or 10k from LEVEL to 5V.

It is a bad idea to add clamping diodes to an input of a ATmega. They will be parallel to the internal ESD diodes. The right way to add clamping diodes is with an extra resistor between the clamping diodes and the input of the ATmega chip.

The most common way to protect an input is to add a series resistor between the signal and the input. For example 4k7 or 10k. It is allowed to push or pull  1mA into the internal ESD diodes of a pin. That means with 12V and a 10k resistor the current into the pin of the ATmega is (12-5.5)/10k = 0.6mA, that is okay. With 4k7 it is still close enough.

There are many others ways to solve this, but my solution is to add a pullup resistor of 4k7 or 10k from LEVEL to 5V and a resistor of 4k7 or 10k from LEVEL to the input pin of the ATmega.