Woocommerce uses tags, categories and attributes to help you organize and sort your products much as it does with your blog posts.
I will briefly explain the difference between them and what they should be used for in your shop.
Woocommerce product categories are the main way to organize products in your shop. For example if you are running a clothing store then you would likely use the categories of “Men’s”, “Women’s” and “Kids”. These would be the main categories but you could then break it down into smaller and more defined such as “T-shirts” and “Sweatshirts”. The products categories are useful for a large number of items but not so much if you would like to make thing searchable and more specific.
The categories of the products may also be included in your URL – depending on your permalink settings.
Product tags are useful when you would like to be able to classify something but it is not worthy of an entire category. For example, if you had a T-shirt which featured a specific design of a beach, you might add the tag of “beach”. This tag would allow it to be found when someone types in beach but there would be no need to create an entire category.
Tags can be added to products to help with the SEO a little, they help to define the product and can be picked up by the search engines although the title and description content will have a larger influence.
The attributes are important for products to allow people to be able to search and find exactly what they are after. Especially so if you have product variations and different sizes. If we are to take the example of the clothing shop again you might have your Men’s T-shirt with a beach design available in the colors red, white and blue in sizes small, medium and large. The attributes would be the colors and sizes which allow the products to be defined. The attributes can later be used to create product variations.
It is important to organise the structure of your shop correctly in order to make sure you don’t have a disorganized mess once you start to build up a larger amount of products in your inventory. You can use the way you implement categories and tags to help slightly with SEO and your attributes will help your customers sort out the product they are looking to buy.