Hello Pragya,

Categories means 2 things:

1st, category is selected according to your VITEEE rank. They call 20000 students in category 1, once the seats in category 1 is filled up, they proceed to call category 2 students.

2nd, Fees is determined by category. Category 1 has the lowest fees and it keeps on increasing. 

Also,  If category 1 seats are not filled up, category 2 students will be offered those seats.