Taxonomy is a feature in Drupal that, in its most basic form, helps users organize content on a site. Taxonomy does not need to be used for a site to work, but when used it can help a site work much more efficiently and dynamically.
In it's simplest form, Taxonomy makes lists that are turned into selection list boxes or drop-down boxes on a content submission form. Whoever builds the Taxonomy vocabulary determines the items in the list.
For example a website devoted to music may want the ability to classify music by genre. A simple list such as the one below may be used:
Sometimes, though, classification lists may contain sub-items in a more hierarchical structure. As an example, a hierarchical list of musical genres could be similar to:
Taxonomy provides the ability for content contributors to create complex lists such as this and then use the list as "controlled keywords", which can be associated with content type submission forms.
When these lists are associated with content type submission forms, content contributors can then tag their content with the appropriate options. Doing this produces a few different results, some obvious, some not as obvious.
One of the most obvious results is that when users view a node to which a tag has been assigned, along with the content, many themes will display the accompanying tags as links. Clicking the link will display a view of all other content tagged with the same term.
Something that may not be immediately obvious is the fact that Taxonomy terms, when used as an advanced feature with Views, provide an exceptionally powerful tool for grouping, sorting, and filtering the dynamic display of content.
To administer Taxonomy, go to Admin menu > Content management > Taxonomy.