Tagging is extra effort but well worth it. It makes it easier for people to find your blog via different services on the Internet.
Tagging gives you a means of telling Internet services, such as blog search engines, what your blog posts are about. Before tagging, Internet services would try to guess what your post was about by using text analysis or link analysis. Text analysis isn't always accurate and link analysis depends upon links getting built up....both these methods are approximations/guesses as to what your posts are about. Blog search engines such as Technorati analyze your tags and use your explicit input about what your post is about. This allows blog search engines to show your blog posts as a search result even before you get links pointing to your post. This drives people to your blog that are interested in timely content.
postreach leverages the tags in your posts to make sure your content is shown to a relevant audience. We match the tags that other blogs have requested guest bloggers on. That gets your blog posts in front of the right audience when they are in the mood to read blogs.
Tags are used for many services on the Internet. One example is a service that searches blogs for tags specific to classifieds listings. Many new services that can bring the right people to your content are using tags. If you are using blogger.com we recommend using the new blogger beta that launched in August. It has a feature called labels which is their name for tagging. You can check that out here it is really easy to use. We use it for this blog.
You can learn more about how to tag at Technorati or at microformats.