What is Taxonomy in WordPress?

In WordPress, taxonomy is a way of grouping posts (or custom post) based on a relationship. In default WordPress you have the taxonomy category and tags which are groups of the posts based on relationship.

You can create taxonomy called recipe, book etc

How to create taxonomy in WP

You have a function called register_taxonomies() in WP codex to create new taxonomies

You have got several parameters for this function, first one is the name of the taxonomy

Add the following piece of code to your function.php file in your theme and you can see the new taxonomy appear under the post menu of the admin section