What Google is referring to when it talks about duplicate content is the same information showing up on your own site that is a duplicate of the content on another page of your site. Google claims to not penalize you for this but does say that having content repeated on your site could affect your sites ranking. This post, by Jill Whalen, has some good information to think about when structuring your site to prevent category and tag links from causing this issue from happening.
Here is an excerpt that I thought was insightful.
Another site I reviewed had inadvertent duplicate content because they had too many similar but slightly different categories for their products, such as these:
They had more than 20 different URLs that all had pretty much the same products on them. Interestingly enough, many of them were bringing direct Google traffic. While that sounds like a good thing on the surface, I believe that if all the URLs had been consolidated into one, they’d have acquired even more weight and overall Google PageRank. This in turn would have provided the one main URL with an even better chance of showing up for even more targeted keyword phrases.