What's the difference between a Category 1 and Category 2 water loss, and does it matter for an appliance leak?

“Water category describes the contamination level of the source water, and it directly affects cleaning protocols and what materials can be dried versus discarded. Most appliance leaks — a refrigerator ice maker line, a dishwasher supply hose, a fresh water heater tank — start as Category 1 (clean water from a sanitary source).”