Products do not show under category in Commerce Kickstart
Here's the proper steps for creating a new product type with matching product display (so you always have a 1:1 relationship of content type to product variation type.)

When making a variant it will ask to create a matching content type for the product display - which it sounds like you've opted for this.

On your created Product Display content type, make sure you add the existing Product Category term reference field. The Commerce Kickstart 2 catalog is very specific to its initial setup (demo or no demo, regardless.) It does some work to hijack the callback path for the provided taxonomy vocabulary.

In fact, for best results you should make sure the new content type mimics the default product display until you're familiar with how it all works.

Lastly, Commerce Kickstart 2 comes with the Inline Entity Form module. It is opinionated that products will always be created from the node form, not individually. So make sure you're creating nodes and populating the products through there.