I thought once I imported Joomla categories that i could just exclusively begin using K2, but that doesn't seem to be the case. I created a category in K2 and it wasn't reflected in the Joomla categories. And it seems that the joomla categories are necessary for things like drop downs to display correctly i.e. with all of the categories.

Is there some documentation that clearly explains the relationship between the two and how I should work with them?

Appreciate your kind attention to this.

The import feature is only for you to move your existing content into K2 at the first install. There is a setting in the k2 paramaters to hide this button after you do it once.
K2 Categories are not synced to joomla categories, and prior to any sections either.
Just create the K2 category, then the item, then use k2 as it is a replacement for com_content.

Thanks William,
I thought that would be how it worked but I use a component called JReviews and it doesn't seem to recognized categories unless they are created in the Joomla default. So I had to create the new category in K2 and in Joomla.

Have you ever heard of this before?

Jreviews probably uses its own tables and categories to store data. Only Joomla articles and categorys are imported into K2 with the import wizard.
If you must move the data - try phpmyadmin to copy the content into a csv format and use the K2 import tool you can find in the extend k2 section at the top to do the import.

Thanks. Seems like a lot of work and I don't know what the payoff is. I had expected that once I imported all of my existing joomla categories (which i've done with no problem) that from that moment on I would just use K2 for categories.

It seems that that's not the case, and if so I don't know what the value of K2 is for me if I have to create categories twice, once in K2 and again in joomla.