You should always use tags to represent assets, such as a vessel, customer, employee, property etc. You can have many of these (10s, 100s and 1000s) and they can grow dynamically (e.g. you acquire new customer).
E.g. a section called “Employee files” could have two filters, “Employee” and “Topic”.
A section represents the one property that all documents contained within it share. E.g. a section called “Tenders” means that all the documents stored here relate to tenders. But they might not share other properties like “customer” or “document type”.
Sometimes you want to group documents by certain processes or tasks, such as “inspections” or “certification”. These are normally tags belonging to a “topic” or “document type” filter in a section (e.g. “Construction”). Of course, if “certification” is a core function within your company, you can consider having this as a section instead of a tag.
Whether for example “contracts” is a document type within a section, or a section on its own, depends on the volume of contracts and how carefully they need to be managed. If there is a business unit dedicated to the management of these kind of documents, then you normally would have a section for them so that you can apply the right filters to stay organized.