With tags (keywords) you can mark contacts, companies, deals or organize projects way easier. For example, you can tag a contact with the industry "automotive" or mark it as "customer" or "potential client", so that you can easily filter your contacts later. To add a tag, you click Edit Tag or New tag when the right tag hasn't been created before.
All tags you have assigned to contacts, companies, deals or projects you can find on the respective overview page. When you tick the checkbox all contacts that you have tagged with the word are displayed. By selecting multiple tags you can filter in more detail.