Each category and yes subcategory can have subcategories added under the parent category.  Your Shop Kart starts out with main category and 1 level of subcategories on select category.  We do not recommend going deeper the 2 levels.

Creating and edit subcategories are the same way as the main categories.  To create a subcategory go to the correct subcategory beneath the parent category… then click on add category link.   For full instructions on creating categories see Creating and Editing Category