Thanks for the report, George — you found a real bug. Saving the Account Categories form (including when adding a new category) was incorrectly deleting the existing categories instead of keeping them. This is now fixed, and the fix is coming out with the new release.

One heads-up: categories that were already deleted by the bug can't be restored automatically, so once the release is out you may need to re-create them and re-tag your accounts. Sorry for the trouble.

To answer your other question — categories let you label and group your shared accounts (for example Fundraiser, Dues, or Camp) so you can tag each account and filter the Accounts page by them. We've also added a short explanation of this in the app on the Account Categories screen, and categories will do more as we build out account and event types.