Undergeneralization is thr process failing to adequately categorize items. This means that while attempting to place things into appropriate categories not enough distinctions are being drawn in order to get a true picture of the distinctiveness of the category. For instance, when categorizing animals you would basically start with the categories of mammals, reptiles, amphibians, fish, and birds. While all animals will fall into one of these general categories, your projects will be more accurate if these large categories are then subdivided into narrower categories such as mammals can be divided into mammals that live on land, mammals that live in water and mammals that fly.
For example, an undergeneralization would be grouping fish, cetaceans (whales and dolphins) and octopi/squid into one category because they all live in the ocean, but even though they have the ocean in common they are three completely different orders of life.