Quick Start: Creating Categories
Now that we have a product to sell, we need a way to display the product on the store. The easiest way is to turn on the Featured checkbox when editing a product. For some themes, featured products are displayed on the home page of your store. If your current theme shows products on the home page and you only have a few items, Featured Products is a quick way to display items for sale.
As your store grows or if your theme doesn't display products on the home page you'll need to create categories to display products and guide your customers to the products they're looking for. Go the Catalog menu and choose Categories.

Notice that next to the New button you have two dropdown lists. The first one lets you select between creating a new category or a new custom page. We're creating a category page for now but later, if you want to add content pages you can follow the same process. The second dropdown list determines where your new category will display in the store. By default "(site root)" is selected meaning that your category will be at the top level. If you want to create a category underneath another one, select it from this dropdown list. For example, if you have a "Women's" category already you may elect to create an "Outerwear" category underneath "Women's" for Women's Outerwear. Later you may create a "Men's" category at the top level with its own Outerwear category underneath.
Click the New button and you'll be taken to the Edit Category page. Enter a name for your category and then click Update. The update button saves your changes but keeps you on the editor page. The Save Changes button will also save your changes but will close the editor and take you back to the list of categories.

The other category fields are optional. Like products, you can enter meta title, meta keywords and meta description information. Again, this is useful for search engines and you should strongly consider filling in this information.