This should be the default behavior with subcategory. Take a look at the Test Case Categories in the JKE Banking sample project. Under the category "Type", there is a category called "Function". For each Type value, we have a different set of Function values available.
Bob Ferguson selected this answer as the correct answer
Dashboards and work items are no longer publicly available, so some links may be invalid. We now provide similar information through other means.
Learn more here.