This really has me confused! Interestingly, WordPress codex, below, doesn't even use the name "Subcategory". It does talk about Categories having Parents, but it doesn't refer to them as Subcategories.
http://codex.wordpress.org/Posts_Categories_SubPanel
(I'm sorry, I don't know how to make that link hot!)
It goes on to say:
"Each post in WordPress is filed under one or more Categories. This aids in navigation and allows posts and to be grouped with others of similar content.
Each Category may be assigned to a Category Parent so that you may set up a hierarchy within the Category structure. In creating Categories, recognize that each Category Name must be unique. Thus, even if two Categories have two different Parents, they must still have different names."
I must have read that,
"even if two Categories have two different Parents, they must still have different names."
fifteen times. It is having a hard time sinking in!