The "tags and tag cloud" switch enables a tagging system similar to what you find on slashdot and other sites. A tag is a simplistic description of the listing, as one word with only alphanumeric characters (no punctuation or spaces). If your language has other characters which need to be included outside the a-z range, you can specify these in your tweaks file with the $keepchars line.

By default, anyone can add a tag either while submitting a listing or while viewing it. Permissions can be changed at Admin Panel -> Members -> Manage Usergroups. Tags are automatically validated when the listing they're associated to is validated, but can be held for validation or not as desired if they're added at a time other than submission. Tags are displayed (on the listing details page) ordered by the frequency with which the tag has been applied to the listing.

The tag cloud is a list of the most popular tags, ordered from most uses to least, shown on the front page by default. Clicking one takes you to a list of all listings tagged with the word. This can be useful for SEO.