The word “taxonomy” comes from French by way of ancient Greek and refers to a system by which things are organized or classified. In biology, for instance, there is a taxonomy that separates animals into one category and plants into another.
For WordPress, taxonomy has a similar but more precise definition. A WordPress taxonomy is a way to group or organize the posts on a website. For instance, “tags” is a taxonomy, allowing you to sort and organize posts by a specific tag.
WordPress comes with two built-in taxonomies: categories and tags. But WordPress allows you to create your own taxonomies. For instance, if your WordPress site is a blog where you write movie reviews, you could create a custom taxonomy called “Genre” and then give each new post a label like “Horror” or “Sci-Fi.” Taxonomies can also be arranged in hierarchies, so “Genre” might have two sub-taxonomies like “Live action” and “Animated” with “Horror” and “Sci-Fi” being grouped under “Live action” while “Pixar films” might be grouped under “Animated.”
Note: The word “taxonomy” itself is never used by WordPress, including in its coding. Taxonomy is just a reference term for the different systems of classification used to sort or organize your posts. But you will need to know the names of your taxonomies (such as “categories” and “tags”) if you are writing functions that sort your posts according to their taxonomic labels.