What categories mean
Separate a content type from a topic or a folder.
A category describes what a resource is. Examples include person, event, image, and article.
A page belongs to one category, which can sit below a broader category. For example, an article can be a kind of text. This hierarchy helps the website select fields, layouts, and lists.
A category is not a folder that determines the page's location in a menu. It is also not a tag: use keywords to describe topics that cross content types.
When choosing a category, ask “What is this content?” For “Where should it appear?”, use a menu, collection, or the site's listing rules.
The technical reference is model#category.