Tagging becomes popular these days because it helps user / search engine to understand / search the content they are looking for. We all use tagging everyday. Think about how you use google, you put in a few keywords and the search engine comes up a list of reference contents. You bascially use the tag (keyword) to find the reference content.
If the author of the content uses some tags which are the same as the those keyword you put on google, search engine will give you a higher position.
In drupal, so far I learn 2 ways to do this tagging things