Tagging is an important way of semantically organising information for users, but unfortunately most users do not understand it, so systems reliant on user tagging can have big problems.
The main site shows tagging done properly, in my opinion. I try to create as few tags as possible, which controls the growth of tags (there are still several thousand). The key insight is that each tag must contain multiple posts, otherwise it cannot by definition organise information (as there is only one post). So, if it seems that a tag will never gain more than one post, it should not be created, and instead we should use a tag "one level up".
Example:
http://www.sankakucomplex.com/2009/04/21/votes-for-foreigners-whips-up-storm-of-xenophobia/
There is no point tagging this "Yukio Hatoyama", as we will probably never hear of him again. Politics is a very broad tag, so the DPJ and Gaikokujin tags help narrow it. "Video Gallery" is a tag being used as part of the site interface, so it is designed to categorise content by format rather than actual contents. Categories also serve this role.
The Channel works quite well as it is mainly reliant on physical descriptions, like "blue_eyes". There has to be a strong consensus for a "subjective" tag to work well, for example "happy_sex" is one such tag which works well. "tagme" is an indication that not enough tags have been applied to the image. Add some tags and remove the tagme if you are feeling helpful.
Tagging on the forum is not working well as most users forget to tag, and some fail to get the format right (tag1, tag2, tag3). Also, there is little awareness of the issues I raised in the second paragraph.
If you want to see an absolute failure of a tagging system, see Pixiv. The majority of the tags there are orphans with only a single image in them.