Categories are like folders and context tags, but much more powerful, hierarchical and customizable. Categories are within a topic type – project categories, service categories, note categories, etc. Also, categories are not shared across different types of things (only tasks and projects share the same categories). You should be using categories to group your items based on type for example.
Categories in our app are organized in the same way that most people organize them in their own mind — hierarchically. For example, the Projects topic has preset categories such as Education, Family, Health + Lifestyle, Hobbies, and Work. The Health + Lifestyle category of Projects contains subcategories such as Health Procedures, Prevention, and Self Improvement. This is a more natural organizational model and allows for greater efficiency.
Categories in our app are user-customizable via the Settings view, as well as directly accessible from the topic views that use them.