Taxonomy, Vocabularies, Terms, and their uses

When using Taxonomy you are quickly faced with the daunting possibility to "view Taxonomies as you need to"... (in no particular order):

• Classical categorization; As stated in the Drupal docs, where a single taxonomy corresponds to the animal kingdom classification into groups such as "Mammal", "Fish", "Bird" etc.
• Used in code-decisions; Use taxonomy and terms to indicated relations between content - For example when presenting a page-view as a collation of nodes (left/right, three-column, multirow... whatever collation). Here you may need a taxonomy named "Page-Position" with the terms ("Left", "Center", "Right" etc.), in order to create a varied but manageable website for your administrators/editors and users.
• Multiple node-representations at once; Used to view a node in several different contexts on your website. You may for example choose to view a piece of news in a teaser-block on the frontpage, while simultaneously presenting it on a news-archive page in full view-mode (teaser+body+etc.). This is also useful in the case where you selectively want to use nodes in RSS-feeds - Create a taxonomy for RSS, and you're set!

Do note that taxonomies are all capable of being sub-ordinate to other taxonomies, and as such they offer the ability to group content in sub-ordinate relations.