According to the Wikipedia, Card sorting is:
Card sorting is a simple technique in user experience design where a group of subject experts or "users", however inexperienced with design, are guided to generate a category tree or folksonomy. It is a useful approach for designing information architecture, workflows, menu structure, or web site navigation paths.
Card sorting has a characteristically low-tech approach. The concepts are first identified and written onto simple index cards or Post-it notes. The user group then arranges these to represent the groups or structures they are familiar with.
There are different variants:
- Open card sorting
- Closed card sorting
- Hybrid card sorting
- Reverse card sorting
Tools:
More information:
- Card sorting: a definitive guide (Boxes and Arrows)
- Card Sorting (Usability.gov)
- Card Sorting (The Interaction Design Foundation)