In the field of SEO, what we mean by categories (otherwise called keywords or search terms) are the words which are searched for by people on Google or other search engines.
It's important for an online merchant to know which categories their target market use in order to find products online. By matching your store's language to users' language, your website will rank better on search engines.
That means more traffic and more conversions for you. Calling your category page "Yoga pants" instead of "Workout trousers" may bring a world of difference to your traffic.