The classifications (department, category, and subcategory) can be set up as you enter the items into the system. 

Depending on how in depth you want to be able to filter your products, you can just set up departments, and keep categories and subcategories at the Default level. These classifications are used in your report filters - so if you want to look at Sales of a category you set up "Bracelets" you can filter and just see that data to determine how well that line of products are selling.

Often retailers will set up initially with departments and in time add categories and subcategories. This is easy to modify on CAS (Management portal) using the item maintenance import.

The attributes (size, color, style, etc.) are optional but are often helpful to add so you can include on your bar code labels as well as to reference when reordering.