SKevo Primary tags have 2 level hierarchy, but they're still just primary tags. I'm confused
They're not, and I agree that the language is confusing.
There are two stated types of tags, but three practical types of tags. Primary tags are only the top-level tags in the Primary grouping, and are displayed permanently in the sidebar on the discussions page. Secondary tags can be nested under a Primary tag or on their own in the Secondary grouping.
So you have Primary, Nested Secondary, and Secondary tags.
The language in the tags page is misleading, it is mistaken in stating that Primary tags are like traditional forum categories: they can be arranged in a two-level hierarchy. Only the top level of that two-level hierarchy is the Primary tag.
Maybe this will make more sense:
