Think of contract pricing as a simplified version of special pricing. It's easier to use, but also less powerful. Also, contract price rules are always specific to particular customers. Special price rules can also apply across groups of customers.
Generally speaking, contract prices are always applied *before* all other special price arrangements. This makes sense, as contract prices are generally more specific and special price rules, more general.
To answer your question about why category is greyed out, this is because you are opening special pricing from the customer's area. When you do that, the rule defaults to being customer specific hence the customer category does not apply.
If you want to create a price rule that applies to groups of customers, open special pricing from the main menu.
1. Start Business Manager
2. From the menu select Toolbox|Products|Customer Special Pricing