Above: the category fields section of the data tool import spreadsheet
The spreadsheet can contain categories nested up to FIVE levels deep. The first column, Cat5_Name1, holds a top level category name. The Cat4_Name1 field on the same line would hold a subcategory of this, and so on down to Cat1_Name1.
Since each product must have at least one parent category, every row of your spreadsheet should have a Cat5_Name1 value, but not necessarily any subcategories.