Tags are basically what you yourself classify your game as. Whether it is Physics, Tower Defense, Speed, RPG, any of those things, these categories define your game a little bit more, besides whether it is in the action or arcade section and whatnot.
So if you look at the homepage of AG (down a ways to the lower-right corner of the screen), you'll see various words in varying sizes. These are the tags we are talking about here. Click on one, you'll be sent to a list of games that are (hopefully) submitted as the said tag. Submitting your game as a tag will add the game to the list, if you chose one with many other games inside.
