Category and Tag are WordPress default taxonomies to group your post into the similar topic.
In WordPress, a “taxonomy” is a grouping mechanism for some posts (or links or custom post types). – via WordPress Codex – Taxonomies
In this series of WordPress101, we are going to learn how to create a new tag and category, and edit an existing tag and category.
Creating New Category – Method 1
To create or edit a category, you can do so from the Categories page. This can be found from Posts > Categories.
Type a new name for a category and hit the Add New Category button at the bottom.
Creating New Category – Method 2
When writing a new post, you will see a meta box on the right side of the post editor with the title Categories. This is where you assign a category (or categories) to your current post. At the very bottom of it, you will notice a + Add New Category link. Click on the link to create a new Category.
Edit a Category
The only way to edit a category is from the Categories page. This page can be accessed from Posts > Categories.
Hover at any particular category you wish to edit and you will see new links. Click on the Edit link to edit that particular category.
Creating New Tags or Edit Existing Tags
Creating new tags or editing existing tags can be done with the same way you use to create and edit Category.