I think that the difference between categories and tags is almost as confusing as the difference between pages and posts for new bloggers.
Categories are the main sub-divisions of your posts such as on a food blog: breakfast recipes, lunch recipes, and dinner ideas.
The tags would be: Vegetarian, Vegan, Low Calorie, High Cholesterol, Diet, Low Carb etc.
Does this make sense?
So for good SEO, you want to try to minimize the variety of Tags that you use so that your Tag Cloud widget serves a useful purpose in grouping related posts together.
Too many bloggers (and article authors) have insane numbers of tag keywords in my opinion, but if they understood the purpose of tags better, they may do things differently. Hopefully you are one of the enlightened ones?