Categories allow you to organize your store so that it's easier for customers to find what they are looking for. For example, if you are selling clothes your main categories might be Men's, Women's, and Children's. From there you can also create sub categories, such as Dresses, Shirts, and Slacks. To get started, select the “Catalog” tab, and then click on “Categories”. Then simply click on the “Add” button, fill out the form, and save your new category!
Depending on which theme you're using, your categories will look something like this in your store front: