There are plus () icons against each parent and child category so it's important to determine where you want to add a new category and click the plus on the correct parent:
Give it a name, it will create a slug/URL and you can also add an image if required:
The SEO Fields tab let's you add various data to help Search Engines index it correctly but also help Social Media sites display links correctly:
On an existing category you might see items that are already assigned to it, this is a helpful way to get directly to an item in a specific category:
You might want to assign a Detail Page Template and Detail Layout to Categories if users are able to navigate through the file structure (useful for eCommerce etc):
