A taxonomy is a list of terms you use to categorize and find your information again, without having to look through every file, image, document, or web page. Using a taxonomy in a corporate, government, or organizational environment allows you to find and re-use content and helps your users search and browse for information. This What Is Taxonomy and Why Is It Useful presentation gives you the basics of taxonomy with examples to illustrate just how useful it is!
You can learn more about taxonomy with these links.
The Accidental Taxonomist by Heather Hedden
Everything you ever wanted to know about taxonomies from NISO