If you want to add a subcategory you have to follow these steps;
1. First click on 'Catalog' and then on 'Categories'.
2. Click on one of the Root Categories and then click on the 'Add Subcategory' button.
(Note: make sure to click on the correct Root Category of where you would like to add your subcategorywant to add it.)
3. You can then enter the category name in the 'Category Name' section and the rest of the category information in the sections below (such as 'Content', 'Display Settings', and 'Products in Category').
Note: when you are done do not forget to click on the 'Save' button to save your data.