The answer to this question is simple. If you take a look at most retail websites you can see that they have different product categories. These categories are used to divide the products into different groups. Each group has a name and products are grouped together based on their characteristics.
Having categories helps customers navigate through the website quicker and find exactly what they are looking for, in as little time as possible.
If the export channel that you have selected uses categorization on their website, you will also need to categorize the products in your data feed.
If you need to categorize your products, see this page for more information.