WordPress comes with the ability to sort your content into categories, tags, and taxonomies. One of the major difference between categories and tags is that categories can have subcategories or child categories.
Adding Category in WordPress
You can add a new category in WordPress when writing a post. On the post edit screen, scroll down to the categories meta box and click on Add New Category link.
You can also add a new category without editing a post. Simply visit Posts » Categories page and add your new category. This method is particularly useful if you want to create all your categories before adding content