Organizing Products with Categories
Categories are a way to organize the products on your website into logical groups, which will help your customers find the products they desire.
Using Categories is not required, and customers will still be able to find your products by clicking "All Products" on your website, or by searching your site.
However, putting products into categories makes it easier for customers to browse your store and find products they are looking for. Think of categories for your website like departments in a brick and mortar retailer. In addition, the categories you create in the admin are directly related to the Category Tree, which is displayed on the left side of you store page. Any changes to your Categories are reflected automatically in the tree.
Note
You can have as many categories as desired.
Categories can contain child categories, and those child categories can also have child categories. There are unlimited levels of sub categories, but a category can only have one parent category.
You can assign a product to as many categories as desired.