If a 3 by 3 matrix has three independent eigenvectors, then it can be "diagonalized". Here, the eigenvalues are, as you say, 0, 1, and 3. An eigenvector corresponding to eigenvalue 0 is <1, 1, 1>, an eigenvector corresponding to eigenvalue 1 is <-1, 0, 1>, and an eigenvector corresponding to eigenvalue 3 is <1, -2, 1>. The matrix having those eigenvectors as columns is
[tex]P= \begin{bmatrix}-1 & 1 & 1 \\ 0 & 1 & -2 \\ 1 & 1 & 1\end{bmatrix}[/tex]
and its inverse is
[tex]P^{-1}= \begin{bmatrix}-\frac{1}{2} & 0 & \frac{1}{2}\\ \frac{1}{3} & \frac{1}{3} & \frac{1}{3} \\ \frac{1}{6} & -\frac{1}{3} & \frac{1}{6}\end{bmatrix}[/tex]
and now it is easy to check that
[tex]D= P^{-1}AP= \begin{bmatrix}1 & 0 & 0 \\ 0 & 0 & 0 \\ 0 & 0 & 3\end{bmatrix}[/tex]
the diagonal matrix with the eigenvalues on the diagonal.
Now go back to Y'= AY, the differerential equation. We can multiply both sides, on the left, by [itex]P^{-1}[/itex] to get [itex]P^{-1}Y'= P^{-1}AY[/itex]. And, since P has only constant entries, and [itex]PP^{-1}= I[/itex], we can write that as [itex](P^{-1}Y)'= P^{-1}APP^{-1}Y= D(P^{-1}Y)[/itex] or, letting [itex]z= P^{-1}Y[/itex], [itex]z'= Dz[/itex] which is just
[tex]\begin{bmatrix}z_1(t) \\ z_2(t) \\ z_3(t)\end{bmatrix}= \begin{bmatrix}1 & 0 & 0 \\ 0 & 0 & 0 \\ 0 & 0 & 3\end{bmatrix}\begin{bmatrix}z_1(t) \\ z_2(t) \\ z_3(t)\end{bmatrix}[/tex]
which is equivalent to the three separate equations [itex]z_1'= z_1[/itex], [itex]z_2'= 0[/itex], and [itex]z_3'= 3z_3[/itex] which, of course, have solutions [itex]z_1(t)= C_1e^t[/itex], [itex]z_2= C_2[/itex], [itex]z_3= C_3e^{3t}[/itex].
Now, because [itex]Z= P^{-1}Y[/itex], [itex]Y= PZ[/itex] just multiply
[tex]Y= \begin{bmatrix}-1 & 1 & 1 \\ 0 & 1 & -2 \\ 1 & 1 & 1\end{bmatrix}\begin{bmatrix}C_1e^t \\ C_2 \\ C_3e^{3t}\end{bmatrix}[/tex] to get
[itex]y_1(t)= -C_1e^t+ C_2+ C_3e^{3t}[/itex]
[itex]y_2(t)= C_2- 2C_3e^{3t}[/itex] and
[itex]y_3(t)= C_1e^t+ C_2+ C_3e^{3t}[/itex]