Tags are a way to label content to make it easier to find later. Tags are a complement to the traditional "categories" way of organizing things. Blog owners can label a post with tags that describe the important content, making it easier for visitors and search engines to find those posts at a later date. You can add as many tags as you wish to a post, giving you extra freedom to tag subjects even if you don't think you'll be posting on that topic regularly. In this way, tags are less restrictive than categories.
As an example, one of our Slayers may write a blog post on the Impending Apocalypse of 2009, where stuffed toys come to life and attempt to kill their owners. If this apocalypse was quickly averted, they may write only one blog post about it, which would be posted under the "Impending Apocalypses" category. There's no point making an entire new category for strange happenings surrounding stuffed toys, as it's unlikely to be a subject that would see many posts, but...