Tags play an important role in improving the usability and findability of your web site. AutoBlogged uses tags a number of ways. First, it can pull the tags that the original author set on the feed itself. Second, it can visit the original URL to find additional tags, and finally you can also use the Yahoo! tagging API to extract additional tags.
Note that tag support in WordPress is fairly new so many older themes do not display a post’s tags. You can fix this by modifying the theme itself or finding a plugin such as Simple Tags that will do this for you.
Tag clouds are an excellent way to increase relevant keyword density on every page of your web site. WordPress has a sidebar widget to display a tag cloud for the most popular tags on your site. Also consider the Simple Tags plugin for a much more configurable sidebar widget.
When you first add feeds to AutoBlogged and run the script, you might notice that the tag cloud contains tags that are not relevant to your content. However, as time passes and your site content grows, the more relevant tags will appear more frequently and the off-topic tags will fall off the tag cloud.
Although you do want a large number of tags to help search engine ranking, you should be more selective with your use of categories. Use categories as a simple navigational aid on your web site and try not to create more than fifteen primary categories for your site. Every time AutoBlogged processes feeds, it goes through all blog categories to see if they appear in the feed content so a large number of categories will slow down feed processing.
One helpful use for categories is to use them as subcategories to group content into consistent main categories. For example, under a main category you might want to create subcategories for synonyms or alternate terminology.