There are two types of card sorting: open and closed. In open card sorting the participants are given cards each with information on it. They are asked to organize the information in a way that makes the most sense for them. So the participant actually creates the category for the cards.
In closed sorting the participant is given the cards and each one has a set of possible grouping. The participant places the cards in the group that makes the most sense.
Websort.net is free online application that allowed the information architect to conduct this research remotely.