Categorization is the act of sorting and organizing things according to group, class, or, as you might expect, category. This noun is very similar in meaning to "assortment," "classification," and "compartmentalization."
When we discuss the differences between mammals and birds, or reptiles and amphibians, we are talking about the categorization of the animal kingdom. Another form of categorization is the way libraries shelve their books by subject, genre, and reading level. Rearranging all those books by color or size would be yet another kind of categorization, but not a very useful one for people wanting to check out lots of books about birds or reptiles.