Custom taxonomies and custom fields are two primary ways to add data about WordPress posts. Collectively, this "data that isn't the primary post content" is called metadata (however, the term "post meta" or post_meta—as in WordPress functions like get_post_meta()—refers specifically to custom fields).
Custom taxonomies are used to organize data into repeatable terms. For example, "Person, Place, or Thing?" and "Thumbs Up/Thumbs Down" are both taxonomical systems, with three and two terms, respectively.
Taxonomies can be hierarchical or flat. WordPress's two default taxonomies are Categories (a hierarchical taxonomy, since WordPress supports subcategories that are members of other categories) and Tags (a flat taxonomy, since there are no "sub-tags").
Custom fields are used to add unique data to individual posts. For example, custom fields would be the right structure for giving each post a custom SEO title, a rating out of 100%, or a unique one-sente...