So playing around with my sites the other day, I noticed an issue where in SharePoint 2013 publishing site, my URL was using the old navigation structure as previous versions of SharePoint and not the clean looking navigation that is now available in SharePoint 2013 causing my URL to look like http://www.contoso.com/pages/default.aspx instead of http://www.contoso.com.
So doing some poking around, I went to Site Settings > Navigation and seen I had the following settings defined.
So I attempted to switch it to the Managed Navigation option and under Structural Navigation:Term Set section, it shows my Term Sets from the Managed Metadata Service Application however nothing really to select and if I choose 'Create Term Set' it fails:
Okay, so now with that error message I assume that something is wrong with my current Managed Metadata Service Application and start looking through Event Viewer, ULS logs and checking to ensure I can access the web service. After doing a bunch of testing and even provisioning a new MMS, I located a hidden setting for the Managed Metadata Proxy that was not enabled with my configuration.
After enabling the property above, everything started working properly and my sites were then using the Managed Navigation feature that I wanted. Doing some investigation, found that if you use the SharePoint Wizard to configure the farm, this option will be automatically enabled and you never encounter this issue; however if you use the manual configuration option that many SharePoint Administrators prefer, this option WILL NOT be checked and definitely can cause some confusion.
Anyways hope this information is able to help you out!
Managed Navigation - http://msdn.microsoft.com/en-us/library/jj163978(v=office.15).aspx