“Card sorting is a simple, reliable, and inexpensive method for gathering user input for an overall structure. It is most effective in the early stages of a (re)design. And while it’s not intended to be a silver bullet, when done correctly, it is instrumental in capturing helpful information to answer questions during the information design phase — ultimately making the product easier to use.”
Card sorting: a definitive guide
Donna Maurer and Todd Wafel get a hold on card sorting in the design process: