Category in Category?

I am trying to create my site entirely through wordpress. A CMS if you will.

I am currently struggling with how to display sub-category posts in order.

Here is the example (WIP):
http://www.thedynamicmediagroup.com/products

Basically I want it to work like this:

Category > Sub-Category > Posts in that Category

Products
– Motion Backgrounds
– posts in the products – motion backgrounds categories
– Countdowns
– posts in the products – countdowns categories

Your help is greatly appreciated!