The activity level categories have their uses.
For example, https://moodle.org/plugins/mod_qcreate and https://moodle.org/plugins/mod_studentquiz use them.
Also, at the Open University, we use them for quizzes that form part of the final course grade. We have a rule that for such quizzes, the questions must be stored in the quiz-specific part of the question bank. We do that for two reasons. First, to ensure that those questions don't get accidentally reused in another quiz, and Second, once the quiz has been created and approved, we add a whole lot of permission overrides, so that those questions cannot be accidentaly edited any more.
So, there are reasons to keep these categories, even though in many cases there is no need to use them.