Tags allow you to attach metadata to objects in the vSphere inventory to make these objects more sortable and searchable.
A tag is a label that you can apply to objects in the vSphere inventory. When you create a tag, you assign that tag to a category. Categories allow you to group related tags together. When you define a category, you can also specify which object types its tags can be applied to and whether more than one tag in the category can be applied to an object. For example, if you wanted to tag your virtual machines by guest operating system type, you might create a category called operating system. You can specify that it applies to virtual machines only and that only a single tag can be applied to a virtual machine at any time. The tags in this category might be Windows, Linux, and Mac OS.
If multiple vCenter Server instances are configured to use Enhanced Linked Mode, tags and tag categories are replicated across all these vCenter Server instances.
Tags replace the custom attributes functionality found in previous versions of vSphere. If you have existing custom attributes, you can migrate them to tags.
You use tags to add metadata to inventory objects. You can record information about your inventory objects in tags and use the tags in searches.
You can manage the user privileges for working with tags and categories. The procedure for assigning permission to tags is the same as the procedure for tag categories.
Incorrect tagging can lead to replication errors. To avoid these errors, diligently follow best practices when tagging objects.
Custom Attributes in the vSphere Web Client