In a nutshell, taxonomy is a way to classify or categorize things. You can also think of media taxonomies as of virtual folders for your media items.

WordPress has a few built-in taxonomies. Most known are Post Categories and Tags. When you post something you can choose a category for it. 

Many plugins have their own custom taxonomies. For example, JetPack’s module Custom Content Types adds Project Types taxonomy for its Portfolio Projects. You see, a taxonomy should not necessarily be called “categories” or “tags”, it can be anything that suits the classification. Portfolio Projects can be categorized by types, not necessarily by categories.

Each taxonomy has its terms. We have mentioned two taxonomies: Post Categories and Project Types, remember? Term is a common name for every post category or a project type. Taxonomy names, as well as term names, can be very diverse. That is why we need some common names to use in documentation and tutorials.

Again, taxonomy is the common name for Post Categories and Project Types; term is the common name for a specific post category or a specific project type. If we have a post category called “Undefined”, then “Undefined” is a term. If we have a project type called “3D design”, then “3D design” is a term. “Undefined” is the term of the taxonomy Post Categories“3D design” is the term of the taxonomy Project Types. Or simply  “Undefined” is a post category; “3D design” is a post type. The great news is that in real life working with taxonomies is much simpler than reading long articles about them.

By default, WordPress does not have a way to categorize media items. So, Enhanced Media Library allows creating custom media taxonomies to organize your media files. Like the first line says, you can also think of media taxonomies as of virtual folders and of their terms as of virtual subfolders for your media files.