Adding an existing category, or multiple categories, when you create a blog post is fairly simple. This process assumes that your blog owner or designer has already created the category you want to use. Later in this post, I’ll explain how to get new categories added.
Here’s how to add an existing category to a blog post:
1. When you are creating a blog post, scroll to the Category section.
2. Select the category you want, and then click Add. You can hold down the CONTROL key or repeat the process to add multiple categories.
3. To change or add categories later, edit the post, and use the same process.
If you are using another program to author your post, you may have a different way to add a category. For example, Microsoft Office Word 2007 provides an Insert Category button 
in its blog template.
If you are just setting up a blog, you may see only placeholder categories, such as Category 1, Category 2, and so on. If this is the case, someone with permission to create or design a blog site will need to add the categories you want to use.
To add or manage categories, the process is also fairly simple, although it may not be easy to discover at first. The categories are stored in the Categories list on your blog site, and adding and managing categories works like any other list.
On the home page of your blog, if you have the necessary permissions (usually the site owner or site designer permission level), you should see an Admin Links section. If you don’t, then you may need to check your permission level with the person who owns the blog, or ask someone else to take care of this for you.
Here’s how to create categories:
1. Under Admin Links, click All content.
2. Under Lists, click Categories.
3. Click New, type the name of the category that you want, and then click OK.
4. Repeat the steps for as many categories as you need.
To edit or delete a category, such as the placeholder Category 1, use a similar process to open the category list. Then, click the Edit button 
next to the category name, and then edit the text or click Delete Item.
A final word of advice is to use some constraint with the number of categories, so that users don’t have to surf through too many of them. Also, if you have a blog roll or other lists below Categories, you don’t want to push them too far down on the page. Your mileage may vary, though, based on the number and diversity of subjects that your blog covers.
Thanks!
Toni
SharePoint End User Content Team