Other than tags, categories are mean to put links into one of several larger drawers. At the moment, those “drawers” can be organized in two hierarchical levels. You can have one major category and several child categories to further specify the categorization.
The category overview provides a list of all categories with their name, description and link count displayed.
The category detail page is mostly available to give a quick overview on the links added for a particular category, as an alternative for the advanced search. Additionally, parent categories will have links to their child categories and child categories will have a link to their parent category displayed.
Categories can only be added trough the menu. The dedicated form lets you specify the name, a description, a parent category and lets you choose if the category should be private. A private category is only visible to you.