It took me a while to understand the difference between categories and tags.  For the first few weeks of my blog's life, it was a mess, organizationally speaking.  I used to tag every post with "vegetarian," for example, even posts that had nothing to do with food!

It all clicked when I read a simple example. (If I remembered where I found it, I'd credit the source!)  And though it applies to most any type of blog, it uses food as an example!  Here's my version of it.

Say your blog is a food blog, and you only post recipes.  You want your categories to be like a table of contents that divides your posts into major groups — a logical category structure might be "Breakfast," "Lunch/Dinner," and "Dessert."  Tags are used more like an index, so you might create tag names for the major ingredients in your recipe, and any other (not too specific) descriptors.  So if your post were a chicken noodle soup recipe, your tags could be "soup," "chicken," and "carrots."

Simple, right?  Even if you don't write recipe posts, you can still apply the basic concept to your blog.

Here are a few more tips to consider for categorizing and tagging your posts.  Keep in mind that there are different philosophies about what's best, so this is by no means gospel.

• Choose category names that are strong keywords, and choose them so that there is very little overlap.  For search engine optimization purposes, you should put each post in ONE category.  Don't go crazy with the number of categories though; I'd say three to ten is reasonable.
• Don't create a tag with the same name as one of your categories; it confuses search engines (and perhaps, people).
• Although tags can be more specific than category names, you don't want 10 super-detailed tags on every post.  I like to choose two to five tags per post, and to create new tags only if I know I'll use the tag again in the future.  This way, when a reader clicks a tag at the end of your post to read more about that particular topic, they'll see more than just the original post.
• Should you display a tag cloud?  I don't think they're all that nice to look at, but if your content is such that an index is useful, go for it!