I know nearly nothing about wordpress, and quickly got confused by the fact I can enter categories and tags. Well, after a bit of searching, I found the answer. Click Read On for more.
From the WordPress FAQ:
We used to have just categories.
These allowed the broad grouping of post topics but when you wanted to describe a post in more specific terms you had to use more categories. That lead to very long category lists inside the blog, very long lists in sidebars. It was also confusing in that what we said were categories others said were tags.
… and there you have it. My first real post on WordPress, was about WordPress.