In Joomla 1.6, sections and categories have been combined into a single category tree. In addition to this, there is no limit to the depth of categories you can define. Watch the Joomla 1.6 video on categories to find out more.
This is a quick look at the new category features in Joomla 1.6.
The new category manager for content (articles, web links, newsfeeds, etc) combines the 2-level section-category system from Joomla 1.5 into a single, nested tree. The category tree can also be any depth (including no categories or just one level of categories).
When editing the category, instead of choosing the section, you now choose the category under which the category will reside. You can also have component specific options for categories and also define metadata.