This is a question that I encounter all of the time from every level of user. Writing content and delivering it on a well designed interface is one thing, but organizing and optimizing that content plays a vital role to making your blog a success. WordPress offers two ways to do just that.
Think of your blog as a book
This idea comes from WordPress expert and veteran Lorelle VanFossen. In her article titled “Categories versus Tags – What’s the Difference and Which One?” she explains that your categories are like the table of contents, and the tags are an index.
Categories are Chapters
A textbook or any large boof of reference, will have not only chapters, but units with chapters in them. This is very similar in that categories can be broken down into further detail with child categories. So depending on the size of your volume, you may have several levels or just one with the general scope of the content.
Bottom line, categories should be descriptive as to what they contain. If you’re writing a food blog, you may not need a category for “cilantro”. That would be better suited as a tag. Instead, have a category called “Herbs”.
Tags are an Index
When you open up a book for a general topic, you might browse over the different chapters, but if you’re looking for a very specific word, you’ll probably thumb to the index in the back. An index is an organized list of words and offers a direct “link” to each mention of the word in the book.
“Cilantro” may be an ingredient that you mention in posts that are in the “Herbs” category, and in the “Mexican Cuisine” category. For someone looking for either of those general topics, they would find those categories helpful, but for someone looking only for posts about cilantro, a tag cloud or list with a link to all posts with that tag would be a lot more useful.
One minor difference
Books are offered in a linear fashion. The web, and especially WordPress, is a living document which can be accessed through a myriad of avenues. With WordPress, you do have the ability to add more than one category to a post. Don’t get too crazy about this though. A rule of thumb is that if you’re adding several categories to your posts, you may want to consider changing a category to a tag. The obverse is true as well: if you’re adding the same tag to a lot of posts, that tag may be strong enough to be used as a category.