A tracking tag lets you add information to a hit about where the visitor came from. For example, the "Take The Tour" button on the home page has a source=front-page tag on it. Here are the hits on the tour link, shown by source tags:
Period
front-page
tour-top-tab
business-card
tour-top-tab"
front-page"
N/A
front-page'123
tour-top-tab'123
"><h1>BlackHatCracker PRO hacked by hacklaplanete</h1>tour-top-tab
tour-top-tab'_
"><h1>BlackHatCracker PRO hacked by hacklaplanete</h1>front-page
front-page'_
Total
Total
3019
1868
911
52
46
44
11
11
4
1
1
1
1
5970
Tags help you figure out where to focus your efforts. Do you get more traffic through Twitter or Facebook? From the front of an e-book or the back? If your links are properly tagged, you can tell.