The Undead category is one of the six that are recognized in the US enemy chart and NP strategy guide. This is the most obvious category since all of the monsters in it actually are legitimately undead.
The is the most important category as far as side effects are concerned. The Sun Sword, Light Axe, and Excalibur have a greater effect on them (in the WSC/PS versions). They are also subject to damage from Harm spells.