Hi,
In your first screenshot, you're looking at the "categories options" tab of your menu item.
So the options there only concern the categories listing.
So what the "show children" option does is that it allows you to display a list of the children of each category below each category name in the listing of categories.
So turning off that option won't remove the listing of the main categories.
If you don't want that, then you should change the type of your menu item to a products listing so that you only get the products and not also the categories of the "main category" of your menu item.