Cannot select subcategory field in entity
Unlike structured entries, when you relate a category to another element, its ancestors are also included in the relation. Due to the way Craft looks up these ancestors when relating the selected categories, to enforce this behaviour, the ancestors are added to the relation before the one you selected, and it looks like you're limiting that Categories field to 1, so only the parent is being added.

Try setting the limit on that Categories field to 2.