With any type of sorting there is a trade off -- if you have too many categories, then the process will be very slow.
What works for me is to do an initial sort on a board into approx 25 categories, arranged in a 5-by-5 grid.
My pattern is as follows:
US Germany Europe (other) Commonwealth Africa South America
France Spain Commonwealth Caribbean Arab countries
New Zealand Italy Africa Asia
Australia Channel Islands
Canada GB Islands (inc. UN, PNG) Eastern Europe
(Yes, I do realize there are some empty spaces)
Then when a pile is so high it is about to topple over, I move it into an appropriate envelope.
When I have a few envelopes for a region, eg Africa, South America, Arabs -- I sort those into individual countries.
The rationale behind the system is that sorting is most efficient when splitting things into a small-ish number of roughly equal-sized categories.
Note that before doing any of this, I do a pre-sort into stuff that I think I might need, and stuff that I will directly bag up and sell on, via eBay
I now have what must be over a million stamps sorted into envelopes by country!!! (it took a few years)