You can have two levels of categories for your products, a primary category and a secondary category.
The primary category is the first level of filtering a customer can filter by. This is usually something like Mens, Ladies, Kids, Mugs etc.
The secondary category are subsections of the primary category. Each primary category can have its own set of secondary categories. For example the Men's category can have subcategories such as 'T-shirts', 'Hoodies', 'Hats' and so on.