In its simplest form, you might look at "category" in the way you look at first class, business class and coach on an airplane. There are significant differences in comfort levels from one to the other... in first class, one seat will take the same space as 6 or so in economy... business class similarly. There are other "percs" thrown in,,, not to mention location on the airplane... first being well forward... quietest... with business just behind... and economy getting the full thrust of engine noise, aft of the engines.
So, too, on ships... but, because of their huge size, there are many more differentiations in categories of cabins. As the category becomes more expensive, you can bet that you'll be getting more space... read bigger cabins. It varies widely from cruise line to cruise line and from ship to ship... but as with airplanes, space is a key element. Location on the ship is also a consideration... and there are significant differences here too from ship to ship.
I guess that the best way to view the "category" system is to understand that many large passenger vessels have a wide range of these categories... with some basic divisions. Inside (no window), OceanView (with a window), Veranda or Balcony cabins...then suites. There are differences within each class... there are Inside cabins with better or poorer location, smaller or larger, closer to elevators and further from them... the same with Oceanview and Veranda and, indeed, suites.
It is quite a complicated system and for a first timer, you may find that a good t/a can help you fathom the intracacies of it all. I hope this answers your question, at least a bit!