Only one picklist category is visible when editing Contract status

The picklist values for the status field in contracts are tied to the status category in which they are related.

Salesforce has three status categories for Contract object:

• Draft: Used when the Contract is getting Created
• Activated: Click on Activate button to get into this category
• In Approval Process:  Available on clicking Submit for Approval Button and used in conjunction with Approval Process 

For a description of all the contract fields, including the status,  please click here. 

The only picklist values that are visible, when editing a contract, are the values that have been created and associated to the status category that the Contract is currently in 'Classic' only.

To create new picklist values, and associate those values to a status category, follow the steps below:

In Classic:

1. Go to: Setup | Customize | Contracts | Fields.
2. Click on the Status field.
3. Click on the "New" button, enter the new Contract Status and select the appropriate Status Category for this value.
4. Click "Save".

In Lightning:

1. Click the gear icon | Setup | Find "Contract" object under Object Manager Tab
2. Hit "Fields & Relationships" | Click on the Status field
3. Click on the "New" button, enter the new Contract Status and select the appropriate Status Category for this value.
4. Click "Save"

This new value will now appear in the picklist when a contract is in the status category associated with this new value.

Few things to remember:

• The Contract Status Category (Draft, Activated, In Approval Process) cannot be edited. But new picklist values can be added for each category.
• In Lightning Experience, Contract Status picklist values are not filtered by the contract's current status — all values appear in the picklist regardless of Status Category. This is a known difference from Classic behavior. Click on the link to get more information on the same:  Sales Features: What's Different or Not Available in Lightning Experience
• If the Submit for Approval button is not visible, add the button to the Page Layout assigned to the affected user(s).
• If there is no Approval Process created on Contract Object, users will receive an error "Unable to Submit for Approval. This record does not meet the entry criteria or initial submitters of any active approval processes...".
  For assistance on creating an Approval Process, click this link to an article that provides detailed steps on creating an approval process - Creating Approval Processes
• Activating a contract changes the contract status to Activated and makes the contract read-only. The 'Status' field will not become Read-Only. This field is still editable, however, once this field is moved to Status Category 'Activated' you can't go back. Changing to these status categories will give an error.
  To get help on activating a contract, click on this link to the article with detailed steps on activating a Contract: https://help.salesforce.com/apex/HTViewHelpDoc?id=contract_activate.htm&language=en_US

Note: When a Contract is activated accidentally, you can re-clone the affected record and change the status back to 'Draft' or your desired custom value if any.