Before decide how to use WordPress categories and tags, first let’s get small overview for both.
Categories provide a helpful way to group related posts together, and to quickly tell readers what a post is about. Categories also make it easier for people to find your content. Categories are similar to, but broader than, tags.
Tags provide a useful way to group related posts together and to quickly tell readers what a post is about. Tags also make it easier for people to find your content. Tags are similar to, but more specific than, categories.
How to use WordPress categories and tags
Here is small story. When started blog, I have no idea, how to use categories and tags. As a result, I just create too many categories and start applying tags to post.
After sometime when check site found that site have large unused categories and huge list of tags which have single post only. I just merge unused categories and remove less important tags from post.
So trick is don’t think too much for category and tag selection, just think like user, if you are site user how can you find your related content easily.
Use tag for SEO and group related posts. Always try to create common tags, so it can use in other post also. Ignore creating tags which used only once.