Lorelle has a great article on Tagging and Tags, what they mean and what they do for you the blogger. There is also a great list of resources in the article.
1. A Tag is a Keyword in a Link
A tag is a keyword. It is created by adding the attribute rel=”tag” in any link going any where.
<a href=”http://lorelle.wordpress.com/” title=”Lorelle on WordPress” rel=â€tagâ€>Lorelle on WordPress</a>
This creates a â€œtagâ€ for â€œLorelle on WordPressâ€. The tag is the words which the link wraps around. Without it, it’s just a link. No more, no less.
With it, it is recognized by search engines and tag services crawlers which add that word or phrase to their â€œtag databaseâ€, acting like a keyword. When a visitor types in the tag word or phrase in a search engine or tag service, like Technorati, any post with that â€œtagâ€ or those keywords, even if not tags, will turn up in the results.
Check it out at Lorelle on WordPress. I could not have written the article better myself. Very comprehensive and easy to follow.