These are the 'product categories' that products are sorted into (e.g. Meat, vegetables, dairy). You need to have product categories set-up before you can start creating products, as every Product must have a product category.
>> Note that once you create a taxonomy and there are products assigned to it you cannot delete the taxonomy. Therefore put some thought into the taxonomies before you launch. if you want to change it later on, you will need to manage migration of products to other categories, which can be complex and time consuming.
Any taxonomies, and entries within them, that you create will become available as Product Categories to attach to products. We HIGHLY recommend that you keep them high-level (E.g. 'Vegetables', not 'root vegetables', 'summer vegetables', 'leafy greens') . . these product categories will become the filters at the top of your list views and shop-front and you do not want too many in use across your site.
You can attach icons to product categories. [need to be specified how]
Below are the settings from the Australian instance as an example to work from.
Once setup, your view of the taxonomies page will be something like below.
There are lots of discussion on how we should improve the logics behind those taxonomies, as some user might need more refined level (for instance a meat seller would like taxonomies for each type of meat to enable their customer to search more easily within their shop). We might also want to unify somehow the instance taxonomies to make interoperability between instances possible (see discussion here). It is not yet a priority but we know the current way taxonomies are working is not ideal.
A rough mapping of the taxonomies used in different instances is here
Taxonomies cannot be translated for a multi-lingual instance as well, they can display in only one language for an instance.