The section under "Equipment" has all of the tags, broken out by general gear, weapons, and armor.
Tags are essentially just characteristic adjectives that apply to a particular bit of gear. For instance, the tag hand applies to a weapon or an attack that can only be used within arm's reach, like a dagger. Similarly, the tag close applies to close ranged attacks like a sword or mace, while reach might apply to polearms, and near might apply to a crossbow.
Some tags convey bonuses or penalties (e.g. clumsy, which imposes -1 ongoing), describe the situations under which an object can be used (like the range categories described above), describe the effects of that object (e.g. area, which indicates the object can affect more than one target at a time), or describe intrinsic properties of that object (e.g. weight).
So how does this work in play? Let's take the simple example of two people fighting: Vandos, armed with a spear (which has the tags reach, thrown, near) and Samarra, armed with a dagger (hand). At the beginning of the encounter, the DM will describe the circumstances, including the range between the combatants. Let's say for sake of argument that there's no surprise here, and so Vandos is keeping Samarra just at the range of his spear (so "reach"). Because the weapon that Samarra is using is "hand," that means she'll have to close the distance in order to strike effectively. Vandos is singularly disinclined to let her do so. Thus, in order to get in on Vandos, she might need to defy danger, perhaps by using DEX; feinting one way, then dropping and somersaulting in close before Vandos can counter.
If she rolls a 10+, success! Vandos falls for her feint, thrusting into empty air as she rolls forward, coming up into a low crouch at an uncomfortably close distance. If she rolls a 7-9, the DM presents her with a worse outcome, a hard bargain, or an ugly choice - Vandos is quicker than he looks, getting the point of his spear back in line and maybe she gets tagged for by a grazing hit (and a little bit of damage) on the way in. If she rolls a 6-, Vandos doesn't buy her feint for a second, and skewers her but good, still keeping her at bay while he's at it.
If she succeeded (either partially or wholly) in her action, she gets what she's after, i.e. closing the distance to where her weapon is useful - and Vandos' isn't. The next time she gets a chance to act, she's going to be well-positioned to inflict harm on him.
And so on...
In terms of making new tags, it's just a case of coming up with the effect you want an object or piece of equipment to have and giving it a name. So for instance, say you wanted to allow incendiary attacks. You might create the following tags:
ablaze!!!: this person or thing is on fire! Flames will inflict 1D6 damage on a recurring basis until extinguished by defying danger (DEX). Stop, drop, and roll, baby!
flaming: any successful attack from this weapon sets its target ablaze!!!
Now, you can have a "dragonsword" that is close, +1 damage, flaming, i.e. a longsword with an extra tag.
Easy!