I'm trying to set up a Term-Store based Managed Metadata navigation for my site. I can create as many levels as I want in the term store, but only the top-level terms show in my navigation. I have each term in the navigation set to Simple Link or Header. Whether my header is blank or has a link in it, no drop-downs appear below it when I mouse over or click on it. I have publishing feature enabled on my site- the site is a SharePoint Online (O365) site that was just migrated from SP 2010.
Per my test in my SharePoint online environment, I set up the Term-store for the managed metadata navigation.
Then if I configure the managed navigation for the site collection, the managed navigation can work fine.
And if I configure the managed navigation for the sub site, then the managed navigation cannot work.
You could check if the current site is the sub site.
It turns out the issue was some custom CSS that was interfering with the drop-downs. That has been resolved by the developer who built it and now it's working just fine.