For a long time prior to E&M, mathematicians had used an informal notion of “natural” or “canonical” mapping, which meant something like one special mapping out of several available ones. Especially important is the idea of natural isomorphisms. Just knowing that two objects are isomorphic is often not good enough to prove results about them because you have to make a choice about which isomorphism of several you’re using, and you might have to make such an arbitrary choice about infinitely many pairs of objects all at once. Having a canonical choice solves this problem.
Prior to E&M, mathematicians couldn’t formalize this idea of canonical choice. They would hand wave about how natural their choice of isomorphism was and how this allowed them to avoid making arbitrary choices. Then E&M defined categories, functors, and natural transformations to formalize this idea of naturality. Their motivation was algebraic topology, but the abstractions they defined turned out to be extremely broadly useful across all much of mathematics.
[1] https://www.ams.org/journals/tran/1945-058-00/S0002-9947-194...
https://plato.stanford.edu/entries/category-theory/
>what limitations of set theory made it necessary to invent/discover category theory?
Category theory did not start as alternative to set theory.
But: "Category theory even leads to a different theoretical conception of set and, as such, to a possible alternative to the standard set theoretical foundation for mathematics."
>What do categories let us do that we can’t do with sets?
"At minimum, it is a powerful language, or conceptual framework, allowing us to see the universal components of a family of structures of a given kind, and how structures of different kinds are interrelated"
Some category theory constructions like adjoints and monads are higher level and more powerful than basic set theory constructions like power set.
"The number of mathematical constructions that can be described as adjoints is simply stunning."