Many people are unfamiliar with what tags are and what the point of tagging your posts/bookmarks is. You are told it is mandatory, but many people don’t even know what a tag is, or how they should tag their posts/bookmarks for maximum results.    
Tagging Basics:
I have heard it said that when using tags correctly, search engine hits landing on tag pages can account for 30% of a website’s traffic from the search engines. That means that your tags are a very important aspect of your posts. What tagging does is it creates a page on a website that contains a list of all the posts that have been tagged with that keyword. These tag pages can rank very highly in the search engines, especially with authority domains like Wordpress.com and Hubpages.com.
Tags become very powerful once you start using tags over and over again. Most posts contain a list of tags at the end of them, which means that each tag links to the tag pages, giving it a little bit of juice. The more you use the tags, the more powerful the tag pages become as they gain more and more incoming links. With each link they get a little more juice, a little more PR, and a little bit better rankings.
Tagging For Maximum Effectiveness:
The first thing you need to do is your keyword research. You want to tag your posts
with keywords that are actually searched and that will actually make you money. If your tag pages are ranking for keywords that no one searches, then your tags are useless.
On your own blogs make sure that your archive pages only show excerpts from the posts, and no the entire thing. You want your tags to only give a preview of each post, and you want to avoid duplicate content so that all the pages on your website can rank highly.
If you want your tag pages to rank even more highly, then submit your tag page RSS feeds to the top RSS feed submission sites, and also bookmark your tag pages following the bookmarking strategies stated above. This can get you even more search engine rankings (from the bookmarks and RSS feeds) and will help your tag pages to rank even more highly in the search engines.
Make sure you track which tag pages are seeing results. For the ones that you are seeing good results from, keep bookmarking them every couple of days to keep them ranking highly and even improve their rankings. For the tag pages that you aren’t seeing results from, forget about them and spend your time on something that will get you results.
Hopefully that cleared up any confusion you may have previously had about tags. If you just follow the advice above, you can achieve great results from your tags, rather than just randomly tagging your posts, which does basically nothing for you unless you get lucky.