Categorization is one part of model building. But doing nothing else is like using Legos by just categorizing them into piles and then doing nothing with them.

Categorization is one part of model building. But doing nothing else is like using Legos by just categorizing them into piles and then doing nothing with them. Categorization - to provide concrete value - requires feedback into the categorization scheme from real world data. There are various indicators which might point out that the categorization is useless or totally incorrect and then modify or abandon the categorization scheme. For instance, in physics it is very practical to categorize collisions into elastic and inelastic collisions (the former conserves energy while the latter conserves momentum). But that's not all of physics, and does not even make sense all of the time. And then we have categorizations like Meyer Brigs which are just nonsense. The problem is, as you said, that people often have this strange illusion that just inventing a category somehow is somehow value adding.