When you add content to your website, there are two fields that seem to generate some confusion. One is the Tags field found right above the Body Edit box in the Edit overlay, and the other is the Meta tag section (where key words go). Although they are related, their purposes are very different.
A Tag is used to help you organize your content into meangful subjects. Visitors to your website can search for the categories that interest them. It's best to use short phrases or words for your tags. You can either set up the categories ahead of time, or add them by using the Tags field as you enter your content.
Example: You have a blog about music. Your current blog post is going to be about new classical music recordings. If you already have a tag (category) for 'classical music', you can enter that tag (once you start typing, the field will auto fill for existing tags). Then if you want to further define this blog post you can add a new tag for 'new recordings'.
So Tags are there to help you organize your content and make it easier for visitors to find the content they want.
Key Words are words and phrases that are added for the benefit of search engines and are not seen by visitors. They are added under the Meta tag section which you will find further down the edit page, below the text editor box. There is a field in this section for a description of the content and a field to enter key words.
The key words you enter should be taken from the text of your article. If you enter key words that have no reference within the content, the key words will most likely be ignored in search results. So enter words or phrases picked from your content that convey the main subject, or are the most likely to be searched for.
If you want to set up Tags beforehand to organize your content, see All About Taxonomy