Categories and tags are very similar. They both allow you to organize content that can then be used in a variety of ways. However there are a few differences.
Categories are best used for broad groupings of topics. For example, if you’re creating a site that reviews media, you might use categories such as Books or Film or TV.
Tags are much more specific topics that you want to use to associate related content. For example if you were creating a site that reviews media, you might want to use tags such as science fiction or horror or action adventure.
From WordPress Support
In an ideal world, we would use categories to group the content on your website into — say — eight to ten global segments. On our blog, these segments are for instance Analytics, Content SEO, eCommerce and Technical SEO. By maintaining a limited set of categories, you can keep your website, and your content focused. Now, of course, you can dissect the content even further, going to more particular groupings. For that, you should use tags.
From Yoast SEO blog
In short, category means is while tag means has. It's recommended that a post only has one category, which makes your content focused. However, tags are not so limited. You may have more than five tags for one post if necessary.