Categories
Categories provide a helpful way to group related posts together and to quickly tell readers what a post is about. Categories also make it easier for people to find your content. They are similar to but broader than, tags. Categories are optional and it is recommended to have no more than 2 categories per post. For example, if you have a brownie recipe post, the categories could be Baking and Dessert, while Tags could be Brownies, Chocolate, Walnuts.
Complete information on using Categories with WordPress posts can be found on the WordPress Support page.
Tags
Tags provide a useful way to group related posts together and to quickly tell readers what a post is about. Tags also make it easier for people to find your content. Tags are similar to but more specific than, categories. Tags are completely optional. You can assign multiple tags per post.
Complete information on using Tags with WordPress posts can be found on the WordPress Support page.