If there are no plug-ins associated with a Category, the Category is not included in the drop down. The Category list comes from Library.db which contains approximately 800 default values added by Cakewalk and the plug-ins actually installed on the PC.
The easiest way to "hide" Categories is use them. Categories may be renamed in the Browser by right-clicking the Category name. Changing a Category name renames the entries the Library.db to the new Category removing the old Category from the drop down list. Be aware, should a plug-in predefined in Library.db get added later to SONAR, it will go into the new Category name. Of course, the plug-in may be re-Categorized but it may be confusing initially if the plug-in defaults to an unexpected Category.
The only other way I know to clean up the Category drop down is directly manipulate Library.db. This is doable but requires some skill with SQLite.