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You can control the which levels display in the new version of the course selector by adjusting the visibility settings.
To have only the top levels display in the course selector as headings use the below settings on the Levels.
Go to Courses > Configuration > Levels
On the Parent/Top Level:
the Type to "Organisational".
Set to "Visible".
Set Children Visibility Recursion Level to "Max Recursion".
On the sub levels have visible unticked.
This will allow the course selector to display all the sublevels under the "Parent Level" heading.
If the sub levels are set to "visible" this is what creates it's own heading for that level in the course selector.
You can also set a sort order to control which order the sub levels display in.