A Taxonomy is a set of concepts, generally organized into a hierarchical structure. Concepts are more general at the top and become more specialised further down in the tree. Taxonomies are often used to create controlled vocabularies of classification terms. These taxonomy concepts can then be used to classify content, or even other concepts.
A taxonomy concept typically has one or more unique identifiers, multiple labels or names (in different languages, or for different user groups) and then relationships to other terms.
The kinds of relationships a taxonomy concept can have to other concepts in the taxonomy are broader (typically a parent concept which can be applied to a wider class of item than any of its child concepts), and narrower terms (a child concept that is more specific than its parent concept). Taxonomy concepts may also have other loosely related concept-to-concept relationships, such as see also.
Taxonomies are very powerful for managing hierarchical vocabularies but the lack of typed relationships between terms means that they are insufficient for modelling business domains. To model these sorts of systems we instead need to create an ontology.