Tags on a listing are like the listing's "keywords". The idea is to "tag a listing" with what tags or keywords apply to that listing. For instance, if your listing is to sell your sports car, you might use "sports car, automobile" as the tags on the listing.
All tags will be run through a "filter" which will remove all characters that are not allowed, and change the tag to all lowercase. This way, tags will be more "uniform" so that your listing is more likely to display when a user is viewing all listings that are tagged with something specific.