What does it mean that taxonomies are hierarchical categories?

Nested categories with parent-child relationships create powerful organizational structures.

Example: You have 200 notes tagged by topic. Some tags are broad ('psychology'), some narrow ('cognitive load theory'). Without hierarchy, all 200 tags sit at the same level and you scroll through an undifferentiated list every time you need to find something. The moment you nest 'cognitive load theory' under 'psychology' under 'behavioral science,' you can navigate from the general to the specific in three clicks — and you can see, at a glance, that psychology contains twelve sub-topics while ethics contains three. The hierarchy makes relative density visible.

Try this: Pick one area of your knowledge system (notes, bookmarks, project files) that currently uses a flat list of categories. Restructure it into a three-level hierarchy: superordinate (broadest grouping), basic (the level you naturally think at), and subordinate (the most specific). Notice which level feels easiest to name. That is your basic level — the cognitive sweet spot where your hierarchy should do most of its work.