team hierarchy question - part 2

I have setup my team areas in a hierarchy as follows:
department A
Team 1
Team 2
Team 3

The categories for my projects are associated with the team directly like so:

category1 --> team 1
category2 --> team 2
category3 --> team 3

I have created Work items against each of these teams and I have created plans for each of these teams. I can see the work items for each plan fine.

I thought if I create a plan for department A, I should see all work items associated with all of the teams. Instead, I got the following error when I double click on the department's plan: " there are no categories associated with the team Area.
Since Department A is a parent of the other teams shouldn't I be a able to define a plan that covers department A? Otherwise, what is the meaning of teams hierarchy?

Any info would help,
Thanks