Hi,
The department module is a brand new module we just released so we don't have a demo site setup yet but should have one setup by the end of next week.  Departments allow you to create a higher level grouping on categories and products.  For example, you could setup depts as follows:

Departments
Electronics
Music/Movies
Furniture
etc, etc.

When you click on the "Electronics" dept the following 2 things happen:

1.  Categories in the category module would be filtered to show all the categories in the electronics dept as follows:

Categories
Cameras
Cell Phones
Computers
TV & Video
Videos

2.  The BuyNow module (product listing) would be filtered to show all the products in the Electronics dept.

The user could then check certain categories to further filter the product listing to refine their product filter and find the products they are looking for.

Walmart.com and Amazon.com have good examples how department filtering works.

Hope this helps!

---

At your service,
Dave Smith