There is a setting in admin > Configuration > Layout Settings > Categories SubCategories Indent with default value of
This puts two spaces ( ) in front of each subcat name, and is cumulative, i.e. four spaces in front of a sub-subcat. Eliminating one or both of the will reduce the indent.
You can put the indent back so it applies to wrapped text as well by increasing margin-left or padding-left in the appropriate classes in your stylesheet.
Code:
a.category-subs, a.category-products {
/*background-color: #ff69ff;*/
/*color: #6699aa;*/
/*margin: 0.2em 0;*/
margin-left: 0.2em; /*adjust to taste*/
/*padding: 0.2em 0.3em;*/
}