Categories are like genres for your content that help your customers easily identify the type of content on your catalog page. Those categories should be broad, just like movies are organized like comedy/documentaries/popular/etc., you should also organize your content into categories that allow you to group several videos under it.
For customers to see any of your videos, collections, or live events, they must be added to a category since your catalog displays content organized by categories. For example, If you're running a fitness channel, you might have your videos organized by cardio, lifting, or nutrition.
Categories are different from collections, which are a way to group videos that are meant to be viewed together or in a specific order, something like a 10-day yoga challenge, a bread-making class, or a step-by-step guide on setting up a recording studio. Take a look at our collections article for a detailed explanation of collections.