Categories are created and managed in the Category Manager, and beginning with version 1.6 of Joomla, they are the only upper level organization for Articles. In previous versions of Joomla, Categories were also stored in Sections.

Categories can also be nested to provide further organization, but this is not mandatory.

For instance, a website devoted to musical instruments could be organized as follows:

In the above structure, Articles could be assigned to any Category.

The Joomla storage system is explained in detail in our free Joomla tutorial course - The Basics.