Any way you want is fine ...

For example:
Code:
TOP1
  SUB1 <--- products
  SUB2
    SUBSUB1 <--- products
    SUBSUB2 <--- products
  SUB3  <--- products
TOP2 <--- products
TOP3
  SUB1 <--- products
  SUB2 <--- products
  SUB3 <--- products
NOTE: Categories hold Products or Categories but never both ...