The way the Platform Category View works is if the item selected has any children you go down a level and traverse them. If you're adding playlists under the console like that you need to create an "All" playlist as well and then you can enter it via that.
See my Windows tree for example
I have those ALL playlists there because you cant select the items above them directly in Big Box. If I click All in LB OR the item above it the same game list will show, so in LB they aren't super useful, but are required in BB navigation. In BB we'd really have no way when you pressed "Select" to know if you wanted to enter at the level you're on, or go down another level, so it was decided you always go down a level when possible.