If you are interested in Information Architecture and creating effective website taxonomies then read this article. It really is a definitive “how to” guide on card sorting. There are excellent resources for further reading as well.
Card sorting is a great, reliable, inexpensive method for finding patterns in how users would expect to find content or functionality. Those patterns are often referred to as the users’ mental model. By understanding the users’ mental model, we can increase findability, which in turn makes the product easier to use.
Does not consider users’ tasks – Card sorting is an inherently content-centric technique. If used without considering users’ tasks, it may lead to an information structure that is not usable when users are attempting real tasks. An information needs analysis or task analysis is necessary to ensure that the content being sorted meets user needs and that the resulting information structure allows users to achieve tasks.