Hierarchy is the technique to drill down the features for the additional relevant details. For example, we want to check the revenue generated by the category of products. By drilling down, we can able to check the revenue generated by sub-category wise. So, this hierarchy helps to understand which product affecting the revenue. It is one of the important features in Power BI and we can create and customize our own hierarchies.
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You can watch this video on Power BI Training to know about hierarchy and how to create a hierarchy: