Tags are displayed on the frontend of your Magento store on details/view pages of products, if the products have any tags assigned to them, and on product list/category pages by the Popular Tagsblock. Tags refer to some quality or aspect of the product(s) to which they are added. When a customer clicks on a tag all the products to which the tag is added are listed.
Tags can be added on the frontend by registered customers. There's an option for adding tags on each product details page. Administrators can add, edit and manage tags from the admin panel of Magento. If a tag added by a customer doesn't exist, it has to be approved by an administrator before it becomes visible on the frontend. To do this, in the admin panel go to Catalog>Tags>Pending Tags. On the page that is displayed there should be a table with the tags waiting for approval. Mark the checkbox of each tag, select Change status from the Actions drop-down menu in the upper right corner of the table, from the Status menu select Approved and click on the Submit button. Another way to do this is to edit the settings of every tag by clicking on its row in the table. Then from the settings that appear use the Status drop-down menu.
To add tags and manage all the existing tags, in the admin panel go to Catalog>Tags>All Tags. A table with all the tags will be displayed. You can edit a tag by clicking on its row in the table, and you can add new ones by clicking on the Add New Tag button above the top right corner of the table. There are four panels with tag settings. When you add a new one first you have to configure the settings in the General Information panel (e.g. name and status of the tag) and click on the Save and Continue Edit button before you can see the other three panels. To add the tag to products click on the Products Tagged by Administrators panel, then on the Reset button and mark the checkboxes of the products. The other two panels (Customers Submitted this Tag and Products Tagged by Customers) show the customers that have added the tag and the products which they have chosen to associate the tag with. When you're done with the settings don't forget to click on the Save Tag or on the Save and Continue Edit button.