please note:

using the navigation widget (appearance->widgets->wppizza->widget type:navigation) (or shortcode) only applies when using install option 2, as you will have to create templates that will work with your theme. (see here for more detailed installation instructions)

although the navigation widget might at first glance appear to work with your theme even when using install option 1 (i.e using dedicated pages for your categories) it is likely that the layout of those pages will not integrate properly with your theme .

you ought to be be using a page list widget of some sort instead

in short:

• install option 1: use a page list widget of some kind
• install option 2: you can use the navigation widget but you must create the appropriate templates