Taxonomy in Drupal is nothing but classifying your content in hierarchical manner such as categories, sub categories, etc. We can do this by creating vocabularies and adding related content terms to it. Term is something which describes your content. Taxonomy can be used for business purpose website may be a grocery website, restaurant website etc. For a website, we can have unlimited number of vocabularies and each vocabulary can have unlimited number of terms in it. Steps for creating and editing vocabulary:
Go to structure tab >>Taxonomy >>Add vocabulary (Give name to vocabulary and provide description if needed (not mandatory).
In vocabulary we can add our own fields and can manage the display as how it should look.
Steps for adding terms to taxonomy:
At the end, go to content >>add content >>product. Fill all the details and your product is added.