Reorder categories doesn't recognize subcategory order

Sorry I am not following what you wrote, at all? Can you show it with a picture?

To be able to re-order you need to enable that in site settings, then the reorder button will show up on the /categories page. Sounds like you didn’t do that?

The default is dynamic order, that is, ordered by latest topic update in the category. We feel this is the best and most suitable default in most cases, so that the most active categories float to the top naturally.