Probably the most powerful tool provided by blog-based systems is the ability to organize, file, and relate your content. Categories are primary filing cabinets where you can "store" posts based on their topic. However, whereas with a piece of paper you have to decide on ONE file to put it in, you can store your posts in as many file cabinets as makes sense. The point is to make your content searchable and retrievable over time.
Tagging goes along with categories to provide as many keywords as you can think of, again to help you (and visitors to your site) to retrieve content relevant to any particular topic. Don't be afraid...you need to use categories and tags to sort your stuff. You'll be glad you did.
Categories & Tags