"Taxonomy" in Drupal is the native way to categorize nodes. So what do you do with the nodes created? You can use it for navigation purposes. A link will get you all nodes with a specific taxonomy set and it can use some boolean logic (and, or or).

• taxonomy/term/[tid]
  lists only nodes tagged with tid
• taxonomy/term/[tid]/[deep]
  lists nodes tagged with tid or any child y levels deep.
• taxonomy/term/[tid]/all
  lists nodes tagged with tid and all its children.
• taxonomy/term/[tid1]+[tid2]
  lists nodes tagged with tid1 OR tid2
• taxonomy/term/[tid1],[tid2]
  lists nodes tagged with tid3 AND tid2

Any number in the square brackets are the description for a number and the brackets shouldn't be entered. If you want to see nodes tagged with the id number 12 you would enter "taxonomy/term/12". [tid], [tid1], [tid2] is the "term id" and [deep] is how far down in a hierarchical list to go.

To learn what the id is for a specific term is you look at the URLs of the different items listed in the taxonomy section (in Drupal site administration). Place the cursor over any edit term and look to the status bar at the bottom of the browser.