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In some situation, you module is required to create a taxonomy which the module use to perform other tasks/features it offers. This is when you can write a code to craete the require vocabulary in the module and make it availabel as soon as the module is installed. You can also add terms programatically to that vocabulary!
Using taxonomy_save_vocabulary for Drupal 5.x & 6.x and taxonomy_vocabulary_save for 7.x, you can create the vocabulary programmatically in your module.
Here is a Drupal 6.x example: