One use of tags I've encountered which has an interesting side-effect is Google mail.
Google allows messages to have "labels" (aka "tags") rather than setting up a folder-based system. Any message can have any number of labels, so it is simply a tag system, but, of course, existing mail clients see the tags as "folders", which means the tags have to include any hierarchy explicitly (e.g. 'SQL', 'SQL/SSIS', 'SQL/SSRS'). If you just use basic tags ('SQL', 'SSIS', 'SSRS') then you get a flat view.
Google mail is also currently limited to displaying matches on single labels, whereas a proper tagging system should be able to search multiple tags, which is, of course, the effect being achieved by the hierarchy type tags.