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I am still getting a feel for ee, and have gotten through most everything but Categories.  There is documentation on how to use the tags and access it in the control panel, but what are they exactly, and how can I use them?  Maybe there is something on here that I can read more on it and actually understand what I can do with them.  Is there a blog or something?  What would be great is if there was a blog where someone explains how to use categories and give an example of how they can be used.  I still don’t know the difference between groups and categories.  I need more info…?

In their simplest form, categories are just a way to further organize (categorize) entries within a weblog. Category Groups are just a way to organize categories (group them).
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Lets say you have products (produce), each product is a single weblog entry…

Weblog = Produce
Categories = Produce Type
Sub Categories = Variations within the product type.

So, you’d have categories/subCategories something like this…

Eggs:
          X-Large
          Large
          Medium
          Small
Butter:
          Block-Salted
          Block-Unsalted
          Quartered-Salted
          Quartered-Unsalted

It then allows you to display products based on those categories rather than “all” your produce.

Category Groups just allow you to “group” for organizationl purposes.
EggsGroup = X-Large, Large, Medium, Small
ButterGroup = Block-Salted, Block-Unsalted, Quartered-Salted, Quartered-Unsalted.

How one uses categories (if at all) depends on your content and how you need to organize it.

Edit-Add: Here’s a Wiki post that might also be helpful… Categories vs Weblogs

Categories are ways of, well, categorizing your content.

A music site might have categories of rock-and-roll, R&B;, country, classical, etc.

A personal weblog might have categories of home, work, politics, movies, music, books, etc.

The “sports” weblog in a newspaper site might have categories like scores, breaking news, standings, etc. Or maybe instead it might have categories like baseball, football, basketball, etc. Or (more likely) it might have both kinds of categories, with an individual article tagged with both “baseball” and “scores”.

A category is really whatever you want it to be. The main value of a category is that you can have a link that shows the most recent posts in a category. You can also set up separate RSS feeds for a category, for those people only interested in certain postings.

I still don’t know the difference between groups and categories.

I’m not sure which “groups” you mean. There is no relationship between categories and template groups. Template groups are related to presentation, while categories are related to content.

Category groups are mainly of interest to people running multiple weblogs. Category groups allow more than one weblog to share the same categories. If you only have one weblog, you’ll only have one category group. More info here.

The real question that people run into is when to use categories and when to create a separate weblog. More info here.

Thanks for taking the time to share simple to understand and thorough explanations!  This helps out a lot!!!!