When you first start writing posts you may not think about their organization, but after you have been writing for a while, you may start to notice that you need some sort of organization for all you wonderful posts. They you might notice categories. Voilà! Exactly what you needed, right? No, wait…now you notice tags. What is the difference?
It can be a bit confusing at first. They are remarkably similar, but by remembering a few tips you can use them more efficiently.
Think of Categories as broad labels. If you were writing a blog on cars this might be the brands such as Chevy and Ford or the country they were made in such as American and Japanese. Tags on the other hand are more specific. You might label these as the model such as Mustang and Accord or style such as-door or coupe.
Besides helping you organize your posts, tags and categories will also help users find the content they are looking for. Searches use these terms to find the best results. There are also a lot of plugins and widget that you can utilize to make you site better using these label.
I hope that helped clear up categories and tags for you, but if you need more in-depth information then you can always check out the WordPress Documentation.