Taxonomies introduce a hierarchical form of organizing content Post Types. When you publish new content to a Post Type, it is organized into one giant list, and after a while can become hard to find individual content. That’s why organizing content into different Taxonomies can add substructures within the Post Type to make finding content easier.
The simplest example is WordPress’ default Taxonomy structure also known as Categories. You can organize blog posts into categories to make it easy for your reader’s to sort through your content and find what is most relevant to them.