All your categories should by Anchored categories. Select Is Ancor = Yes for each categorie.
To create and edit categories, navigate to Catalog > Manage Categories. In the center of the page you will have the option to create a new category.
1.Enter a name for the category. This is how it will appear on the front end of the sites selected.
7.Select Yes or No from the Is Anchor drop-down. This drop-down has two effects.
* Anchored categories will display all products associated to all child categories (and child of child, and child of child of child, etc.) on that category’s page, along with the products associated directly to the parent category.
* Anchored categories will display the filterable attributes of all products that display in the category page (meaning the products associated to that category and to its child categories) in the Layered Navigation menu in the left column. Layered Navigation is discussed in more detail later in the chapter.
Select Is Ancor = Yes for each categorie.