Tags are one of two taxonomies included in WordPress, and it’s used to sort posts by subject. The other taxonomy included in WordPress is categories. Tags are not hierarchical, meaning that a tag can’t have a parent tag or a child tag. If you want a hierarchical structure, categories would be a better choice.
Tags are generally more specific than categories – think keywords rather than overarching subjects. For example, if a post has the categories “Book Review” and “Horror”, it could be tagged “Stephen King” and “The Shining”. Unlike categories, a post isn’t required to have tags.
You can edit tags in Posts → Tags. To add a tag to a post, locate the “Tags” meta box in the right sidebar while you’re editing the post and type the name of the tag you want to add. If the tag already exists, it will be displayed as an autocomplete suggestion while you’re typing. If it doesn’t, you can create it by hitting enter when you’re done typing.