Magento Open Source, 1.9.x

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Category Levels

The number of subcategory levels that you can have in the top navigation is set in the system configuration.By default, there is no limit to the number of levels of subcategories you can set up. In the following image, the  Home & Decor category has a depth of two levels.

Subcategory Levels

To set the depth of the top navigation:

1. On the Admin menu, select System > Configuration. Then in the panel on the left, under Catalog, select Catalog.
2. Click to expand the Category Top Navigation section.
3. To place a limit on the number of subcategories that can be used in the top navigation, enter the number in the Maximal Depth field.

The default Maximal Depth value is 0, which does not limit the number of subcategory levels you can have.

4. When complete, click the Save Config button.