forum nomenclature confusion

[vbntn]

I'm confused about forums, catagories, subforums and childforums.
I have created a forum, I want it to be underneath a catagory. I have about 5 catagories setup.
When I create it, save it, it falls to the bottom of the board. all of mine are set to display 1. (sorry, new guy here, I just take the defaults)
But if I set it to 5 or whatever other number, it still goes to the bottom of the board under a catagory I don't want it under.
If, I edit it, make it under a Parent Forum, it appears with a darker block around it's icon, but it is in the correct catagory.
Now, let me say that I am creating catagories by this way:
create forum, and select NO to act as forum, thus it creates a catagory. Isn't that the correct way?
Do I need to create "subforums"?
If so, how do I do that?
I have one big block of forums on the page. NOt separate blocks. And the catagories are all in the one, with the forums underneath each.
Thanks,
Mark