I use TAGs is quite loosely. As well as for items, I use them for:
Character background (Veteran. Grizzled. Bad leg. Grumpy. Gun-nut)
Special abilities/traits/feats (Leaper: you can leap Near with 2+ rolls)
Enemy behaviour (Stealth. Stalker. Pouncer. Territorial)
even Map properties (Dark. Icy. Stalactites. Narrow).
The way to use them is diverse. A player’s background might make some hard or easy:
PC: “I want to see what i can discern from looking at the enemy army force”
GM: “As a VETERAN, that is EASY for you” (even if he fails, i will tell him something because he is a veteran)
PC: “I want try to calm the crying child down so she stops crying and gives away our position!”
GM: “lol with your GRUMPY demeanour that is definitely HARD”
Same with items:
PC: “I hack at the thing’s tentacle, to free Leonardo!”
GM: “Axe is good at CHOPPING. That is defo EASY!” (or double/max damage. Does not have to be hard/easy, can be whatever feel’s right in the moment)
Special abilities/traits/curse/etc are TAGs with very specific mechanics (like in MAGIC like others have mentioned). For example, a player has chose a weird race or is blessed/cursed with huge kangaroo-like legs (STRONG LEGS: Leap high + NEAR with 2+ roll). It may start as a more loosely defined TAG, and then as we play the game and they experiment with using it, a specific mechanic emerges.
Behaviour and map properties allow me to quickly describe and have simple mechanics for a space without over prepping. I might have specific mechanics for the tags, or improvise them on the spot.
Saber Tooth Tiger (Stealth. Stalker. Pouncer. Territorial) - This alone tells me it will stealth, pounce on a target, do big damage/maybe try to drag them in the brush, then try to stealth again. If they leave it’s area it may leave them alone.
If i want to be specific i could say POUNCE = (dex save) ultimate damage and target pinned to ground. If PC saves, tiger tries to claw them: weapon damage attack.
The CAVE tags (Dark. Icy. Stalactites. Narrow) are so self-explanatory I won’t bother.
Main thing is TAGS are super versatile. They allow for distinction between different players/items/abilities/places/WHATEVER, without getting bogged down in mechanics. But they can still have mechanics if they need them.
They are GREAT. The background ones especially to help players role play.