There are several terms that need to be explained in order to better understand the Taxonomy functionality.
Term - The term that is used to describe content. In some articles it is referred to as descriptor.
Vocabulary - The vocabulary is a list of multiple terms related in some way.
Taxonomy - The categorization of the content in a hierarchical structure.
Tagging - The process that associates a term with the content on your Drupal web site.
For more information on how to work with Drupal Taxonomy you can refer to the following tutorials:
- How to create a New Vocabulary
- How to Manage a Vocabulary
- How to Post Content in Drupal Taxonomy