The 'display top level menu item' and 'hide empty entries' and 'display content count' options don't seem to work.
- Create "Category" taxonomy with 3 or so terms
- Add Taxonomy Field to Blog Post type
- Create new blog post and assign 2 terms
- Create taxonomy menu link item
- Set Taxonomy to "Category", Root Term to Parent Taxonomy
- Tick all three checkboxes on the same edit page
- Set menu text to "Categories"
You will notice that the menu it flat with 3 terms and not 2 and not showing the parent of "categories" or even "category" as the menu item. And no count is shown.
This could be just a theme machine issue that doest render - I'm yet to test it out.