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Tags refine this grouping even more by referencing detail related to a line in the post. The describe the content of individual sections. Tags kept in the sidebar cumulate in a so called "cloud" formation, much like a list. This works by fitting a lot of information into a little space, also making searching for specific information much easier. The will also provide alternate navigation paths to your blog content for individuals and search engines.
I am providing a link to a "blogger" friendly Tag Cloud Widget that can be installed to assist with managing both Categories and Tags. I am going to try this out as well to see how it works on this site. I am quite interested to see how this interfaces with the rest of my blog.
Please try and let me know how it works for you as well. Always remenber to backup your template prior to installing and new gadgets.
Thanks again,
Regards,
Mark