The software suite supports multiple levels of categories. To edit these, go to Admin > Inventory Preferences. There, you can enable these with the Show Categories option. This will then give you a category tree you can customize:
In addition, you can enable tabs at the top of your Inventory page to make organizing and sorting inventory easier.
The suite also lets you organize your POS with category drill downs. To enable this, go to Admin > POS Preferences:
Your POS inventory will now show with high-level categories: