I ordered a interior pre hung door from my home improvement supply and I gave them the size of the rough opening. The top has about an inch of space but the width on the sides near the top is the same size width of the rough opening and the bottom of the frame on the sides has about a quarter of an inch gap on each side. I trimmed the rough opening so that the door will just fit. In this scenario can this door be squared and leveled?
Sounds like they gave you the closest width size for standard. If the jambs are perfectly plumb, it will work. If not plumb....... The top gets covered by trim. Usually 2" wider on the door width, 2/4 =30", 2/6 =32", etc. This gives you room to shim for plumb.
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The top part of the door unit will fit snugly in the framing rough opening. If you are lucky you will be able to adjust the bottom part of the door unit, specifically the ends of the door jambs, within the 1/4 inch clearance and still get it square.
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