In addition to tags, categories are another dotCMS taxonomy. The main difference between tags and categories is that category labels are pre-defined labels fixed by webmasters so that content contributors can ONLY choose from the list of terms provided by the category field(s) on a structure.
For example, a product type content may only be available in red, green, and blue. To limit order entry for products, a "color" category field can be added to the product structure that only displays red, green, and blue as color choices. In the example image below, a News Item structure has a category field of "News Type". The news item being added is being labeled as "Tech" and "Money" so that the dynamic news page can pull this content on the right news pages.

Webmasters tend to prefer using category fields because they can be used reliably on dynamic pages to pull content whereas tags are difficult to predict and are not locked down to a fixed list as in the case with categories.
However, category drop down lists do have their limitations. Here are a few short, best practice, rules to remember before adding a category field to a structure:
- Category lists should also remain relatively short in length (40 labels or less). Your category list will probably grow as you scale and may become unwieldy.
- Use Category lists for logical labels only. They should NOT duplicate content - use a relationship field instead of a category field in this case.