In Data Lists you will see most sets of data that need to be presented in a form. For example, languages, currencies, occupations and yes, categories. These standard categories are the ones pre-set by operator and allowing a content item to be posted in one category at a time only (simple dropdown select). When you enable/disable this field in a form it would be called "Category" (singular).

Now, the Categories section in Forms build is for the new categories that can be activated by enabling "Categories" field (plural) in a form, allowing users to associate a post with multiple categories (select box with "add" button for multiple boxes) and also allowing people to add their own categories.

Use "Category" when you want to define structure for all posts in your network as site operator and when you want a post to belong to only one category at a time. Use "Categories" when you want to allow users to come up with their own categories and post into multiple categories at a time if they want.