As far as I know, you can use it for anything UP TO the category cited. I also thought the certificate we receive each year for the visa benefits was a cat 1-5. Either way, you can use it for categories 1-4 or, if the latter, 1-5.
You cannot use it and add points or combine them to get into a higher category though. You can certainly combine them for multiple nights stay, though. Take advantage of the promos, when available. Check the site for current promotions. Many of them reward you with a 1-5 certificate for every two paid STAYS. I highlight stays because a single stay is from check in to check out, whether it is one night or 10.
Hope that helps.
I have had mine a few years, so I don't recall what I originally received, but I am assuming that is correct. Wasn't too long ago, you could find alot of cat 4's in places you'd want to be. Many have been bumped up to 5, though there are still some good 4's. I stay at a very nice courtyard just north of Boston (Woburn in Unicorn Business Park). Full service restaurant, full bar, free coffee in the lobby, indoor pool, nice workout room and nice rooms. The staff is very nice, as well.