The nice thing about categories is that you can use more than one per contact. You can even create your own categories to suit your particular needs.
For example, at Adventure Works you might want to create categories for Wine Tasting and Skiing, to keep track of which events each customer has participated in.
Because the Adventure Works events are so much fun, many of the customers have participated in more than one event.
When you create categories, they're added to Outlook's Master Category list and can be assigned to any Outlook item. Want to assign the Skiing category to all the messages about that event? You can.