Right. Any page that's part of the Category namespace (e.g. starts with "Category:") is a list of pages automatically collected by the server. It looks for every page with a matching category tag (e.g. "[[Category: CategoryName]]") and puts all pages marked with that tag into a list.
So, if I create a series of pages that are all characters who are mimes and I want them all to be collected in a single categorical listing, I could mark them all with "[[Category: Mime]]". I could then go to "Category: Mime" and see a list of all the pages that I marked with that tag.
The reason you see "[[Category:Alignment]]" on the Category: Villain page is to further organize that category into a higher level category. The Villain category is actually a subset of the Alignment category, as are the Hero, Vigilante, and Rogue categories. The structure looks something like this:
* Categories
- a list of high level categories
* Character Traits
- a list of different character traits
* Alignment
- a list of all character alignments
* Anti-Hero
- a list of all Anti-Heroes
* Anti-Villain
- a list of all Anti-Villains
* Hero
- a list of all Heroes
* Neutral
- a list of all Neutral characters
* Rogue
- a list of all Rogues
* Vigilante
- a list of all Vigilantes
* Villain
- a list of all Villains
* Archetypes
- a list of all character archetypes
* Careers
- a list of all character careers
* etc.
* Characters
- a list of all characters
* Definitions
- a list of definitions of terms, abbreviations, etc.
* etc.