Subcategories are not displaying because the option to customize the layout and text of each product category landing page has been selected, but is not in use.  It is not necessary (or even desirable) to create a page for every product category. 
  1. Go to Fundraising > select eCommerce.
  2. Select the Stores tab.
  3. Navigate to your store name and click Edit in the Actions column. 
  4. Click on step 13. Configure Product Category Pages. 
  5. For each of the product category pages that you see listed, click Delete in the Actions column.  
Read more about Configuring Product Category Pages
Read more about Adding a Product Category