Tags, why they are important and how they differ from Category
“A tag is a keyword which describes all or part of a Post. Think of it like a Category, but smaller in scope. A post may have several tags, many of which relate to it only peripherally. Like Categories, Tags are usually linked to a page which shows all posts having the same tag. Unlike Categories, Tags can be created on-the-fly, by simply typing them into the tag field.
“Tags can also be displayed in “clouds” which show large numbers of Tags in various sizes, colors, etc. This allows for a sort of total perspective on the blog, allowing people to see the sort of things your blog is about most.
“Many people confuse Tags and Categories, but the difference is easy: Categories generally don’t change often, while your Tags usually change with every Post.
Categories and SEO
Most people create a set of general categories in order to impose some kind of order on their Posts without thinking of the possible effects their choices will have on search optimization. A set of more specific child Categories, created with a consideration of keyword naming, will improve the rank of Pages when the practice is coupled with a change in the Permalinks settings. The Post’s URL needs to include the Category in the path.
You can use multiple Tags but be careful to use only one Category, especially if you employ the above Permalink tactic.