Questions on digital products - composition and storage?

All,

Good afternoon!  I'm exploring starting a new ecommerce site selling some specialized digital products and I was wondering where the digital data is hosted and if there are any speed limits on downloads.  A typical digital product of mine should only be 2 - 5 MB, so I want to make sure there won't be any traffic issues.

Secondly, I was wondering if we can break down the categories into sub-categories.  I may end up with a category structure like the following:

- Level 1
   - Level 2
      - Level 3

I didn't see anything that looked like that, but am only evaluating a demo site and am not sure if that is possible.

Finally, is it possible to create filters that would allow customers to quickly find products across categories?  I want the customer experience to be as easy as possible.

If anyone has any questions, or if I've used the forums incorrectly and it would be best to break up my questions into separate posts, please let me know.  Thanks in advance for any assistance, hope all is well and have a most blessed day!

Peace,
Pete

I found the answer to one of my questions.  It looks like categories can indeed be embedded by creating them and dragging and dropping them into an existing category