Hi,

1. The “Toggle function for categories widget” option adds the “arrow” button and functionality for showing hierarchy when you have a lot of categories and subcategories.
https://gyazo.com/bcd80aba111c8400b2048d60fc7dab7e.

Here is an example when it is disabled:
https://gyazo.com/9934cbe1bf4e842174810818eee7f002

This option will work with the “Product Categories” widget in Appearance -> Widgets.
https://prnt.sc/21zmugo

Also, the “Show hierarchy” option should be enabled in the “Product Categories” widget.

If these settings are not working on your site then deactivate all the 3rd party plugins and activate only theme-required plugins on the site and then check the issue. I am sure your issue will be solved. Then Activate the 3rd party plugins one by one and check which plugin is creating the issue for you.
Otherwise, if the issue still exists then keep the 3rd party plugins deactivated and share the WP admin login details of your site so I will check and give you a possible solution.

Best Regards.