Click on the course that you wish to edit

Click "Grades" at the top of the course page

Type the name of the category into "Category name"

Click "Aggregation" to select what grading method you'd like for the category 
(More info on all types: https://docs.moodle.org/310/en/Grade_aggregation)

To move already existing activities into newly created categories, click the vertical line icon next to the activity you wish to move. 

To move the activity into a category, click inside the dashed-rectangle box directly below the category

Alternatively, if you'd like to move multiple activities at a time, you can click on the checkboxes on the right side of the gradebook.

Once you've selected all the items you wish to move, click on the drop down at the bottom of the page and select the category that you'd like to move them to. 
Click here

Once you've selected all the items you wish to move, click on the drop down at the bottom of the page and select the category that you'd like to move them to. 

Your activities should now be located within their respective category.

Organizing the Gradebook by Category