You need to have at least one category, which is why trying to delete the only one will not work. When there is only one category the name is not shown anyway so it doesn't really matter what it's called.
If you have more than one category defined, then you can just rename Miscellaneous to something else, or delete it by clicking on the X next to the category name on the top level listing.
How do I get rid of "Miscellaneous" course catagory
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