When I first started with Drupal 7 I did not really know what this term meant so I just avoided that part of the setup. Of course as time went on, and I started to brave things like views, I started to want to group specific articles and pages so that I could list them using Views. Suddenly the relevance became clear. You need to tag / reference the article when you write it.
The standard installation of Drupal 7 comes with 'Article' as a content type and that has the ability to add tags, so basically one can tag an article and then list numerous articles by their tags using Views.
Taxonomy
So, firstly, you go to Structure / taxonomy where you are given the option to add a taxonomy term - either a new term or a subset of the existing terms - one of which is tag. To add a new tag, you simply 'add a term' under tags. Tags are useful for the standard 'Article' provided by Drupal 7 but are limited by the way you input them when adding them to the 'Article'
My preference is to use a reference specific to your site. Typically, I will use the shortened site name and add sub-references such as 'news' or 'issues' etc. These may also have many sub-levels if you want to add them, so when you make use of them, you can choose a level and everything below that also applies. For more detail :
Tagging an Article
If you want to tag an 'article' then you need to add terms under tags. One of the down sides of the standard 'article' content type is that it uses the 'type in a letter' system so if you don't know what you're looking for, it probably won't get tagged. Generally, I prefer to avoid making modifications to the standard content types and adding my own.
Adding a Content Type
This is a fairly straightforward procedure, and if you expect less computer literate people to be making use of your back end, its a very good way of limiting them to the features that you want them to see. Go to Structure / Content Types and add a content type. You can then decide for yourself what you want to use there -
You may or may not want the article to be promoted to the front page, or for the writer's name to be included there. Comment settings may be modified in advance as well as menu settings. This allows you to limit what the end user can do under permissions.
Adding a Reference Check Box to your Content Type
One of the big bonuses of adding your own content type is that you can add stuff to it without messing with the original 'Article' or 'Basic Page' content types. Effectively you can add a field for references which means that your end user just has to select a box to choose what type of article has been written.
Click on the 'Manage Fields' tag while editing your content type and add a new field. Give it a name (such as reference) and under 'field type' use 'term reference'. Under 'widget type' you can now decide if you want check boxes etc. Once you've chosen that, you will also be given the option of deciding what level of your reference tree you want to be made available to the user
For a full description with sexy screen shots go to http://www.drupalgardens.com/documentation/taxonomy/content .
