Hi,
I am little confused; are you talking about the
- Virtuemart Product Module,
- or Category Page.
If you are talking about VM - Product Module, yes you are right, all products will be displaying (including child-category's products). It has always been like that in VM2.x as well. It is not a new feature came with VM3.x. There is nothing you can do about it. It is how VM - Product Module was developed.
But if you are talking about Category Page, then it is a different story. If you add product to child-category, thatt product doesn't show up in the parent category (it just tested it with VM3.x) -- so nothing has changed
But in either cases, those are completely Virtuemart backend related things, and has nothing to do with our templates. Templates don't decide what product to show or hide. Templates are only changing the layout, the inputs come through the core.
Regards.