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Add child category: let's say we want to add subcategory under the parent, decoration. For example: tableware, candles, vases, pillows,... Again type the category name, but additionally we're going to select a parent category, in this case decoration. That's how we make an hierarchic category structure.
Add sub child category: now we can continue making deeper and deeper category levels... For example, I can add new categories such as: plates, coffeecups, spoons but with the parent category selected on tableware.