Using the taxonomy feature within Drupal helps classify content according to a 'keyword'. Taxonomy within Drupal uses a hierachical structure. It is easy to define parent and children relationship within the hierachy and this can be shown within the drupal drop-down menu system.
To define a taxonomy, the module has to be installed and it helps to have content types defined
1)Content management -> Taxonomy
Vocabularies can be assigned to any content type.
Once a taxonomy is assigned to a content type, one can use the vocabularies to aid in search filtering, drop down menus within views, blocks, panels...the features are endless.