I had some trouble getting my head around this, too. You don't need to create individual Pages for your categories. All you need is to create category "pages" or templates.
Follow the instructions on the Codex Article about creating category templates and your problems will be solved. It's really simple. In a nutshell, you just need to create a new category web page called by the name of the category you want to "feature". The example uses Category ID 6.
Following the instructions, make a template file called
category-6.php. Using the default template hierarchy when someone clicks on category 6, WordPress first looks for a category-6.php file, then a category.php file, and so on down to the index.php file. If it finds the category-6.php template file, it generates it. No effort from you!
I've done the same thing on my site if you click any of the categories listed at the top or bottom of any page. You will see that the information on each category "page" is different. Drill down through the "important" subcategories and you will see the top content change. On the lessor categories, I allowed it to just go to the category.php template file since the posts are explanation enough.
Then, on each category template, I used two important tags.
[make sure this is and the next code are on one line if you use them]
This says to sort the categories by name in a list, to use the titles and not the descriptions, and to only list the "children" subcategories of category ID # 4, excluding all else. This way, I get a listing of all the subcategories under category 4.
Then I use the Customized Post Listings by Coffee2Code and use the following tag:
"<li>%post_URL%</li>", "4"); ?></ul>
This gets me 15 random posts from category ID 4 to act as "highlights" from that particular category and subcategories.
I have text at the top of the page that explains the category and all this is followed, as part of the Loop, by excerpts of the posts within that category.
The only sad part is that for now, if you click "previous entries", you will get the same text on the next batch of posts in the same category. I haven't yet figured out how to set this to "know" when this is the first "page" of the category being viewed. Mind reading is the feature WordPress needs to work on next.
It's really simple. Within a very short time, maybe an hour or so, I created 20 some unique category pages to explain those categories. You can get into more detail and even set up different style sheets, headers, footers, and sidebars for each category. If you look closely, you will see that I do indeed have a different sidebar for my categories than I do for my front page and posts, showing you the flexibility of this system. It's pretty slick.
Good luck with this and let us know how it works for you.