The main menu of your store displays the selection of categories that are available in your catalog. You can think of the top navigation as different departments in your store. A top-level category serves as a landing page for all the subcategories below. The position and presentation of the top navigation might vary by theme, but the way it works is the same.
The first level of categories below the root typically appear as options in the main menu. Below that, you can have as many additional subcategories as needed. The category structure of your catalog can influence how well your site is indexed by search engines. The deeper a category, the less likely it is to be thoroughly indexed. As a general rule, anywhere between one and three levels is considered to be the best. You can set the maximum number of levels that are available in your top navigation in the system configuration.