Carrot

Green

In the above example you could use Content Types to show only fruits, or you could use Content Types plus Taxonomy to ask your website to display all fruits that were orange.

You can relate all items by the Taxonomy (Vocabulary is the Parent Level ie Flavor)
For example all Orange items would relate these two Content Types then the user can reduce it more by selecting only Fruit or Soft.
Once we get a sense of the Content Types your data needs we can more clearly define the groups of Taxonomy needed for each and consider which ones the Content Types need to share to relate to each othe

Content Types - Consider this a table in the database. This table stores a data type called Fruit. Fruit may have fields other Content Types do not have like “Season”, “Seeds” etc. So it has special fields you can attach to it. Or maybe it has Taxonomy Sets that other Content Types do not have. By having the right set of Content Types your data is more easily customized without losing relationships.
(Synonyms: node, content type)

Taxonomy can be seen as tags. Items can have more then one tag. By clicking these tags you can see all items with these tags and therefore see relationships. Also when looking at item tagged Orange you can then show a block on the left or right helping the viewer find other items marked Orange.
(Synonyms: category, tag, vocabulary)