Since the introduction of Tags by Technorati, there has been much buzz about this new application and the step it takes towards the Semantic Web.
Tags are simply a bottom up way of categorizing websites via keywords. Whereas "Meta Tags," which are a common way for a webmaster to designate keywords to a website, are a top down approach, Tags in the social sense are bottom up and are created by all people. Del.icio.us, Flickr and others enable visitors and webmasters alike to designate and organize tags. For example, I might add "tags," "Semantic_Web," and "Meta" to this entry which would enable others who have labeled other websites with the same tags to see this entry.
While my description above doesn't do much justice to this phenomenon, Shelly Powers (via Strange Attractor) does an incredibly visual and illustrative job of describing tags. Jeremy Wagstaff has a good list of sites that use Tags as well as a good article in the Wall Street Journal.