Serendipity Forums

Is there a functional difference between the two? I'm not sure which to use or if I should use both,etc.

There isn't a big difference. In earlier versions of s9y it was hard to select multiple categories for entries, but easy to select multiple tags. Now that's pretty much the same. But tags still have functionality like "related articles by tag".

I use tags basically for subcategories, and sometimes to connect articles about the same main topic that ended up in different categories.