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, with each top-level category page providing a destination landing page that encompasses any associated subcategories.
The first level of categories is typically used for the top navigation of your store. 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 optimum. However, the maximum number of levels available in your top navigation is determined by your system configuration.