Early on I had trouble deciding where to put non-dangerous animals for example. But I ended up taking the lazy DM way and sticking with the defaults.
The Dangers—>Monsters is what I use as my Monster Manual. Any creature with a statblock goes here. I'm assuming this is the intention...if it has a statblock you could fight it. So, cat, dogs, etc. all go here.
Inhabitants are mainly for in-game plants and creatures that give flavor to an area but are not used in encounters. I just don't use this topic category. Generally, if I want to describe the flora and fauna of an area, they go into a snippet for the place's topic. If I need more information, it is almost always because it is something they need to interact with that requires statblocks, so they end up in my creature manual.
Where I might use the inhabitant topic is if there was, for example, a sacred type of tree and I wanted to add a lot of history about its socio-economic importance to the area and plot points surrounding it.
There are other threads about this on the forums and there isn't one "right" way. Different approaches may make more or less sense based upon the game system and campaign. Personally, I don't want to think much about where to find something, so I would probably put "timid toothless squirrel" under "dangers/monsters" rather than inhabitants, because I might still need a statblock if they want to hunt this creature and all my other creatures are in monster topics.
Others will probably want to put mundane fauna and flora in inhabitants topics as flavor for places, and keep the monster topics for, well, monsters.