If it is mimicking a real scope in its action, when you set the display to DC coupling mode then it reflects the actual voltages being measured, in this case going from -0.7V when the zener is in conventional forward conduction (AC source on negative cycle) and up to +3.3V when the zener goes in to reverse breakdown (i.e. usual operating mode as voltage regulator) on the positive AC cycle.
If you put a scope in to AC coupling then what it does is remove the "DC" term, which is basically the average voltage, and displays the variations on that. So here you resulting clipped voltage is roughly square, so if you remove the average of +3.3V & -0.7V you will get the +/-2V variation either size of that displayed.
Usually AC mode is used when you have some signal superimposed on a much higher DC value and you want to investigate that. So if you have, say, +/-5mV or ripple on top of a 12V supply then trying to amplify the 11.995V to 12.005V range is going to overload the display (using real hardware instead of simulation tools) but putting it in AC mode will remove the 12V and then you can amplify the +/-5mV up to make it easier to investigate.
