Let's start with creating an example category.

Press Categories and then New in the top right corner. You will see a page:

Short description:

• Title – enter a name of category
• Alias – enter an alternative name of category or leave it blank
• Published – choose yes/no if you want to publish category or not
• Category Order – choose the order of category display (first you have to save a category)

See an example list of categories: