Web Categories are the categories used on the website where the store is using it's own website. You create the Web Categories, then add the products to those web categories.
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If you haven't already created any Web Categories you can now start by creating the Parent Category and all of the child categories to go under that.
How to create a web category
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Click on Web Categories
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The Web Categories browse window opens
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Click on button New
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Then create a new Web Category window appears
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Click on button Save and Close
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What is a Parent Category?
Answer: a parent category is the category to which the sub category or child category lives under.
i.e.
A parent category is Pens
A child category or sub-category could then be Ballpoint Pens
Looking like this
How the Web Categories are used - and how they are different from Product Categories and Price Categories.