The difference between category and segment is that a category is a static list of email addresses, whereas a segment is dynamic and will adjust based on demographic field(s) data, behavior, and more.
A segment distinguishes the recipients by some sort of demographic that recipients have in common like a certain state or city. To create this, go to Contacts > Segments, click the Create a Regular Segment button, choose a name and description, click Choose a Clause button, choose the clause type.
Permanent categories: do not use any sort of demographic. This is just a group of email addresses that you want to keep together all on the same recipient list. To create this, you can go to Contacts > Categories, choose name and description and click save. Once you've done this, import your CSV and on the last page of the import, place a check mark next to the category you want to put the contacts in.
Temporary categories: are good for 30 days from the last time a campaign was sent to the specific category. If it's not sent to for 30 days, it's deleted from the system. This is good for one time sends. To create this, import your csv and on the last page of the import screen, select the create category checkbox and type in a name.
NOTES ON AUTOMATION
Your Automation workflows may also impact which contacts reside in a Segment or Category. Using the "Change Field" option in an automation workflow can add a contact to a Category or update a demographic field based on the subscriber's actions.
Learn more about Segments & Categories here.