Hey @hopefulness,
When setting Subcategories to display from Appearance > Customize > WooCommerce > Product Catalog on a test site I own when viewing the main parent category only the sub categories within that parent category are displaying.
Settings
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Main clothing category displaying sub categories
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The results of this testing indicates that the functionality of the WooCommerce plugin itself is working correctly.
From what you have described, it could be code from another plugin or theme which has caused a possible conflict and affected the functionality of WooCommerce.
To see if that is the case we’d suggest carrying out a conflict test on your site by disabling all other plugins aside from WooCommerce along with switching to a theme like Storefront. This will help with trying to and locate what software you have installed which could possibly be causing this behaviour? You could use a free plugin called Health Check and Troubleshooting to carry out such testing.
When in Troubleshooting mode all plugins will be deactivated and only the admin of the site carrying out the troubleshooting would see those changes. Any customers visiting the site would see no changes at all.
Once you have disabled all other plugins and switched themes if the behaviour is resolved you can then enabled your theme and sites plugins testing after each one is enabled until the behaviour returns to locate the culprit.
https://docs.woocommerce.com/document/how-to-test-for-conflicts/