In a live model within SAP Analytics Cloud, dimensions can be organized into logical categories using either level-based hierarchies or parent-child hierarchies. Level-based hierarchies are used when the relationships between items are defined by distinct levels, such as Geography might be divided into Country, State, and City levels. Parent-child hierarchies, on the other hand, are useful when the data's hierarchy is not strictly defined by levels but by a parent relationship where a child member is associated with a parent member, which is common in organizational structures or product categories.
Reference:
SAP Analytics Cloud Help Documentation: Creating and Managing Hierarchies SAP Analytics Cloud User Guide: Working with Models