A Category is a collection of Articles. It is the middle level in the hierarchy:
Sections > Categories > Articles
A website might have Sections called "Planes" and "Cars". Within the "Cars" Section, the website might have Categories such as "Station Wagons" and "Sports Cars". Within the "Sports Car" Category, the website might have Articles detailing various types of sports cars.
To create a new Section. Select Content from the top menu, and then Category Manager from the drop-down menu that appears.
Click the button titled New situated towards the top right corner of the screen (Highlighed in yellow in the following image)
Enter the Title and Alias in the following screen. It doesn't matter what you enter in these fileds, but it is a good idea to make them relevent to the content. For instance, If I call my category "Sports Cars", I can give it the alias "Sports Cars" as well.
A description can also be entered from this screen. This will be shown at the top of the page for that section. For instance, In our category "Sports Cars", you may want to have an introductory paragraph or image. Enter this information in the Description field.
Make sure to press the Save button (Situated towards the top right hand corner of the page).