Categories give the catalog its structure, collections give merchandising its surfaces, and tags give both a cross-cutting filter. Every one of them is a real page with its own SEO fields and block layout.
Categories give the catalog a stable hierarchy that breadcrumbs, navigation, and search all read from.
Create seasonal or curated collections for drops and campaigns, and remove them later without disturbing your category structure.
Tags like linen or gift-under-50 filter across the whole catalog, so products can be grouped in ways the category tree doesn't cover.
Category and collection pages are built from the same blocks as the rest of the storefront, so a launch page needs no new code.