Great example! Thanks for sharing it.
I’ve seen similar cases—not in communities I have managed but in our customer base. One huge brand that I won’t name came to us, looking to migrate their community to Discourse. They provide navigation software and they had sub-categories for every single geographic location they serviced.
At the time we were concerned about the load on the admin functions if they had thousands of categories. We refused to build deeper layers and tried to convince them of the power of tags, but they wouldn’t budge. We walked away on the deal because it was never going to work in a way that we believed was sustainable.
Designing scalable IA is so important.