Anil in a pronet post on tags vs. categories
Categories are for classifying your blog's information when you want a defined structure, especially one that can be optionally controlled or constrained by a blog's administrator. They're also a key tool for organizing your site's physical structure and URLs, especially with the improvements to URL options in MT3.3.
Tags are perfect for ad-hoc organization, owned by all the contributors to your blog, and let you take advantage of synonyms and slang and other parts of conversation that don't fit well into a defined hierarchy.
Technically, of course you could call the concept by either name (or by keywords) but we distinguished these two concepts by the behaviors they're intended to enable. Make sense?