The number of subcategory levels that you can have in the top navigation is set in the system
configuration.By default, there is no limit to the number of levels of subcategories you can set
up. In the following image, the Home & Decor category has a depth of two levels.
To set the depth of the top navigation:
1. On the Admin menu, select System > Configuration. Then in the panel on the left, under
Catalog, select Catalog.
2. Click to expand the Category Top Navigation section.
3. To place a limit on the number of subcategories that can be used in the top navigation, enter
the number in the Maximal Depth field.
The default Maximal Depth value is 0, which does not limit the number of subcategory levels
you can have.
4. When complete, click the Save Config button.