Classifications give you a method to segment information. In the Reports and on Searches in the Lists there are Classification filters.
Classifications are used throughout the system, including on Transactions in the General Ledger.
If you are familiar with QuickBooks, Classifications are similar to Classes.
Go to, Setup>Configuration>General>Classification Types
Classifications can be imported via the Import Classificaions Types template.
Setup > Import Data > Classification Types
On their respective Classifications tab, you can set up to three classifications (aka classes) on Documents, Transactions and Items.