The taxonomy module in Drupal allows multiple lists of categories for classification. It offers the possibility of creating thesauri (terms with horizontal relationships) and taxonomies (terms with hierarchical relationships). Basically, the taxonomy deals with a hierarchy of information and the thesaurus deals with relationships between terms. Taxonomy is what affects how exactly the content is organized.
Settings for the taxonomy module can be found at Administer >> Content Management >> Taxonomy.
With a fresh Drupal installation no vocabularies will be shown in the list.
You can add a new vocabulary using the "Add vocabulary" button.
In the next video we will show you how to create a new vocabulary.