Categories are the broad topic divisions of your content, and tags are the more granular, specific topics you write about. Both are used to help make your content more accessible and your navigation easier, and both apply only to posts (not pages.)
While you can add both categories and tags on the fly, it’s a good idea to have at least a category structure in place at the outset. This requires some planning and forethought, yes, but hopefully you have done your foundational work before jumping in, so it shouldn’t be all that difficult to come up with a basic category structure for your content.
WordPress requires that every post be assigned to a category and comes with a default category called ‘Uncategorized’. If you don’t assign a category to your posts, WordPress will automatically assign it to ‘Uncategorized’. This looks kind of cheesy, to be frank, so it’s a good idea to rename the Uncategorized category to something else that is more appropriate for your content. Alternatively, you could leave it as is, and if you ever see ‘Uncategorized’ show up in a category listing, you know you’ve missed assigning a category to one or more posts and can fix them then.
Category Name is exactly that. Category Slug is typically the uncapitalized, hyphenated version of the Category Name. So, for example, if you create a category called WordPress Tips, the Category Name will be WordPress Tips and the Category Slug will be wordpress-tips.
Unlike tags, categories are hierarchial. You can create sub-categories of any of your categories by assigning a parent category. All posts assigned to any sub-category of a parent will show up in the archive listing for that parent category, but only posts assigned to the sub-category will show up in an archive listing for that sub-category.
Category descriptions do not display by default, though some themes do display them. If your theme does not display category descriptions on the public part of your site, you can still use them as “notes to self” and enter a description as a reminder of what kinds of posts belong in that category. The category descriptions do display in the category listing, so this can be a quite handy way to document your thinking when creating your category structure.
Categories can also be added “on the fly” by clicking the ‘Add New Category’ link in the Category section of the post edit screen. Note: When adding categories this way, the slug is created for you, and the description is blank. You can, however, assign a parent category.
Use only one category per post. This is considered best practice for two reasons. First, it is less confusing for your readers, and second, you avoid potential duplicate content issues with the search engines.
There are two ways to add tags. You add Tags beforehand by clicking ‘Post Tags’ in the Posts menu.
Tag Name is exactly that. Tag Slug is the uncapitalized, hyphenated version of the Tag Name. So, for example, if you create a tag called Must-Have Plugins, the Tag Name will be Must-Have Plugins and the Tag Slug will be must-have-plugins.
Tag descriptions do not display by default, though some themes do display them.
Tags can also be added “on the fly” by typing the tag and clicking the ‘Add’ button in the Post Tags section of the post edit screen or by choosing from the most used tags in Post Tags. Note: When adding tags this way, the slug is created for you, and the description is blank.
Use multiple tags per post. Use tags to identify sub-topics covered in the post. Tags can cross Category boundaries and provide additional ways to “drill down” into your content and keep your visitors on your site longer. You can still do effective SEO on your site without using catgories or tags.