App Categories are a hierarchical structure, meaning that each Category can have child categories. A child category is usually used for a sub-topic under a broader topic.
Example: A Year Groups category may have child categories for Year 1, Year 2, Year 3 and so on. And within each year group, they can have further child categories.
You can add a child category while writing a Card or from the categories screen. Just select a parent category when adding a new category and your new category will become child category.