Undo Zoom undoes the affect of the last zoom operation. That is, if you have zoomed in close to look at an object in detail, Undo Zoom will quickly reset the Display window view to the orientation it had before you zoomed in.
Undo Zoom swaps the saved zoom level with the current one. Using Undo Zoom (or Ctrl+F2) repeatedly will swap back and forth between these two zoom levels. The saved zoom level is only changed by a zoom operation. Panning and rotating do not change the saved zoom level.