What is the use of file categories? What are the benefits?

First up, let me say that if you do not use the Downloads area, that is if you concentrate wholly on creating articles and not uploading files, then there is no point in creating categories for files.

If you do use the Downloads area, then using file categories allows you to organize your files, effectively creating sub-folders which users can then use to browse the files by. It also gives you control over which users can access which files, and other functionality similar to article categories.