Card Sorting is a method of user research that actively involves users in the creation of a navigation structure. With closed card sorting, categories are defined in advance and users assign navigation terms on cards to these categories. With open card sorting, the categories are not predefined. Instead, users sort the cards into groups that make sense to them and then name these groups. Card Sorting ensures that the structure of the navigation (and the naming of the navigational items) corresponds to the mental model of the users and not that of the company.
Find a more detailed description of the method here: Card Sorting