For reasons that I am not aware of, Drupal 7 does not come with taxonomy field as default and that means you have to "insert" it into a content type of your choice.
I noticed that whenever I was creating a blog or book content, there no way to enter the categories or tags into it.
A little search leads me to the method how to do it.
First, enable Field and Field UI Modules.
Next go to Content Types and select "manage fields" for content type of your choice.
Then enter all parameters as shown above.
Hope this helps!!