While the French term genre can be used to apply to a "kind" or "sort" of virtually anything, it is most often used in the categorizing of stories. The stories do not have to be told in prose form either; genre can apply to television, film and theater as well. This is just the most common usage. Categories of nonfiction books, like humor, current events and true crime are just as worthy of the genre distinction as mystery and drama. There are even genres of poetry, painting and sculpture. One could go so far as to say that styles of architecture could be called genres.
What makes the genre concept so much more regularly used to describe communicative arts endeavors? In a word, its usefulness. Long ago, when a person first experienced a certain type of book or play and wanted to find more like it, she would be at the mercy of word of mouth and the wisdom of her librarian, book seller or other expert in the field. Enter the concept of genre.
Genre is nothing more than a loose, fuzzy logic way of categorizing these things. Who benefits from having words like mystery, western, Regency romance and thriller in the vocabulary of literature and narrative? Audiences, most certainly. They can now find what they are looking for; not to mention gain a sense of community from the awareness that there are others out there who share their taste in stories.
Audiences are not the only ones who benefit from genre. Every person along the chain from author to publisher to bookstore owner benefits when the demand for a particular kind of story can be identified, filled and marketed to. As audience tastes develop, the broadest terms of genre may no longer suffice. Does your reader like mysteries in general, or only "cozy mysteries"? Speculative fiction is one field where these divisions of genre into subgenre have multiplied like Star Trek tribbles. A few of the more popular subgenres of speculative fiction are fantasy, space opera, post-apocalypse, and urban fantasy.
There has even been a definition created for a genre of works that slip between the cracks, and seem to flow independently along a course undefined by genre conventions. We call that genre of genreless stories slipstream.