When people visit your site they want to be able to find what they are looking for quickly and easily. In order to do this you need to group your related content together and there are two ways you can do this.
The most important method is to build up categories and, if necessary, sub-categories. For example, this site has a category “Results” that has sub-categories of “Championship Shows”, “Open Shows”, etc. When a visitor click on the main category of “Results” they will be shown all the content, including everything in its’ sub-categories (when creating new content and assigning it to a sub-category, you only need to select that sub-category, not the parent).
There are two ways to create a new category. The first, and easiest, method is to created it when you are creating your new post. In the category box simply click “+ Add New Category”, enter a name for it and if it is to be a sub-category (child) then select the Parent Category from the drop down box, then click “Add New Category”.
The second way is to click Categories, which is below Posts in the admin area. In this section you will be able to create new categories and edit older ones. Categories also have other options, which are available when you edit the category. For instance, you may want to give a preamble blurb for your visitors at the top of each category. You can also delete a category. Deleting does not delete posts filed under it. Instead, if a post is not filed into any other categories, then WordPress will automatically file the post under the default category, which is usually “Uncategorised”.
Tags are another way to group your content in addition to categories and are purely optional. The main difference is that tags are not hierarchical (you cannot have sub-tags), and are used to describe your post in more detail. As an example, you may have a recipe for brownies on your food website. This would probably be in a category for “Deserts”, but you could also tag it for “chocolate”, “brownies”, “walnuts”.
As with the categories, Tags can be added both when creating/editing content or from the admin area.