To reproduce...

1. Create an empty couurse.
2. Add a grade category "Top level category"
3. Add a grade categort "sub category"
4. Add three manual grade items "Grade 1", "Grade 2", "Grade 3"
5. See image "Grade bug 1"
6. Select the three grade items and move them under "sub category"
7. See image "Grade bug 2"
8. Select grade category "sub category" and move as a child of "Top level category"
9. See image "Grade bug 3"
10. "sub category" has moved under "Top level category" BUT the three grade items are no longer under "sub category" - they are under "Top level category"
11. See image "Grade bug 4"

So when moving the sub category the items in the grade category have "detached" and become attached to the same category that sub category did. Surely this is wrong?

EDIT:

This is using the "Move" icon at the bottom, centre of the screen. It only seems to be this that does this. The blue arrows work as I expect. Not sure if it's a bug or a feature but it seems odd.