In a land of reptiles and mammals, a bird is an odd duck.
That is, if the only two categories you have are reptiles and mammals, where do you put a bird? It's warm blooded, so it's clearly not a reptile. Therefore, it must be a mammal. But it lays eggs and has no hair, so it's not a mammal. Therefore it must be a reptile. If you find enough birds you'll eventually make a new category. If you only find one or two, you're just gonna have a problem.
And what about Australia? Is it a continent or an island? Um... both? Neither? If we had more land masses like Australia, we'd have a term to describe them. But it's the only one, so we're kinda stuck. This doesn't mean the concepts of continents and islands are useless... just that the boundaries between the categories aren't as firm as they might appear. Incidentally, by some definitions, Madagascar actually counts as a continent! And one could certainly make the case that Europe is really just a set of peninsulas sticking off the western edge of Asia rather than an independent continent.
This is a problem with almost any taxonomy. Sure, it's useful to group like objects together, but outliers require adjustments. When we encounter something that doesn't quite fit, we can make a new category (Bird!), change an old category's definition (continental status is now based on local belief), or just shrug.
The thing is, our categories affect our perception... and that's a big deal. For example, different cultures divide up the color spectrum differently, and thus they "see" colors that people in other cultures do not. The way we categorize things affects our perceptions, and the way we perceive things affects the way we make decisions. Different perceptions will lead to different behaviors which leads to different outcomes. That's some serious stuff. The point is, even when we're being logical, we may be heading in the wrong direction.
George Lakoff has a book titled Women, Fire and Dangerous Things that explores the impact of categories on the mind. The title comes from an term found in an aboriginal Australian language which refers to a category that includes "women, fire and dangerous things." Definitely worth a read if you want to explore this idea further.
The point of all this is simply to say that boundaries between categories are often not as solid as we'd like to think. Beware of excessively binary thinking - and don't be too surprised when you come across a duck-billed, egg-laying creature that is otherwise mammalian (man, those Aussies have a knack for messing with categories, don't they?).
Want to read more about the relationship between perception, mental models and decision making? Check out my article titled Metaphors Are Mindfunnels, from the Nov/Dec 08 issue of Defense AT&L magazine.