How does Bitcoin read from/write to LevelDB I know that Bitcoin Core uses LevelDB since 0.8 version. However, I couldn't find detailed explanation about how Bitcoin stores and retrieves from LevelDB. E.g. If B transaction uses an output from previous transaction A as input, how does Bitcoin lookup this transaction and see if it's spent? After transaction B is spent, how does this transaction get updated?
In the specific example you asked, it does so by querying the LevelDB located in ./bitcoin/chainstate (there is where the UTXO set is stored).
UTXOs are identified by its txid (Little Endian representation) leaded by a c.
Example
Transaction
246c5a81b6ad0dfc0dbc0b2ff5bde65ee1913f75a47d409b8ff8074a27ec1000
is identified in the LevelDB by:
c0010ec274a07f88f9b407da4753f91e15ee6bdf52f0bbc0dfc0dadb6815a6c24
or what is the same:
630010ec274a07f88f9b407da4753f91e15ee6bdf52f0bbc0dfc0dadb6815a6c24
since the hex representation of the lowercase ASCII character 'c' is 63. Notice that when you query the database you should not do it using the string representation of the value, but the byte array one.
Each entry in the LevelDB contains two values, the identifier (explained avobe and used to query the data), and the value.
The value of each entry (the UTXO) is encoded in the LevelDB following the structure that follows (extracted from this comment from the source code):


Serialized format



VARINT(nVersion)
VARINT(nCode)
unspentness bitvector, for vout[2] and further; least significant byte first
the non-spent CTxOuts (via CTxOutCompressor)
VARINT(nHeight)


The nCode value consists of:

bit 1: IsCoinBase()
bit 2: vout[0] is not spent
bit 4: vout[1] is not spent
The higher bits encode N, the number of non-zero bytes in the following bitvector.
In case both bit 2 and bit 4 are unset, they encode N-1, as there must be at least one non-spent output).



You can find a better formated explanation and examples in the source code from the provided link.
Notice that, since chainstate database used to trigger anti-virus software, as you can check in this issue and in this question, the first lines of the chainstate contains the obfuscation key, a 64-bit value identified by 0e00obfuscation_key that should be XORed with each data value from the database. To do so, the key is concatenated with itself until it reaches the length of the obfuscated value.
Example
Lets o_k = '27c78118b7316105' be our obfuscation key, and
{&quot;key&quot;: &quot;63000002f414665fb03389dd19776732bf90883bcb399d23323747596e98dd1801&quot;, &quot;value&quot;: &quot;26c326d7353661dc7005d274976f458691f24f0f05d141335f4ad5927e41&quot;}
be one entry from the database. As you can see, value does not follow the above introduced format, since it is obfuscated. value is 60 characters long, so if we extend the obsfuscation key since it reaches the same length, we get:
27c78118b731610527c78118b731610527c78118b731610527c78118b731

Now, if we perform the XOR between the value and the key:
26c326d7353661dc7005d274976f458691f24f0f05d141335f4ad5927e41 XOR 27c78118b731610527c78118b731610527c78118b731610527c78118b731  

We obtain:
0104a7cf820700d957c2536c205e2483b635ce17b2e02036788d548ac970

That matches with the previous stated format, and it's indeed the UTXO value identified by 63000002f414665fb03389dd19776732bf90883bcb399d23323747596e98dd1801.