Tags, as we know them, are flawed

Using tags on web sites and in applications has become a common practice. You can find them everywhere -- in blogs (like this one), news and media sites, internet shops, discussion boards, Q&A sites and in many other places, including enterprise collaboration tools. Sometimes they're really helpful, but in the majority of cases it's just chaotic mess of words. Concept of tags was intended to facilitate the search for related content or to categorize things. However, actually it doesn't work or it works poorly. Why is it so?

The question is important for social BI tools as well, as they often feature tagging.

Too much freedom
Initially, idea of tags is very reasonable, as it employs associative thinking, which is natural for humans. I believe, it was supposed that users will choose right tags because they're interested in keeping information organized. While it can work for one person or a small team, it doesn't work for large groups, if only they don't have special and strict tag moderation policy. And usually, they don't. Rare exclusion -- Stackoverflow, they have very efficient system of tags, but they had to develop a whole self-sustaining social policy to achieve this. In other words, if you offer tagging to users, then you should either teach them how to use them right, or do not offer it at all. Well, SEO people like tags, but this is not a valid reason -- applications are made for people and not for search bots, at the end of the day.

Tag means nothing specific
Another cause of misuse is that tag doesn't have any specific meaning. There could be customers, products, blog posts or articles -- these are understandable entities. But what is tag? Is it a keyword? Then why this word is considered to be key? Why not other?

Word "tag" itself doesn't provide any direction for use. Actually, it just means "some random word subconsciously generated by user's mind in attempt to establish some memorizable associations with the item".

I can't clearly formulate what tag means, and I'm sure that vast majority of people also can't. So how can we use something in the system design, if we don't know exactly what it means?

Tags are unreliable
If there is no any common understanding what tags mean and how they have to be used, it is no wonder why tags do not do well what they were intended for -- obtaining related and relevant content. If users do not get expected result -- they won't use the feature. And users usually consider contextual search much more reliable than tags, even if it produces a lot of irrelevant information. So if tagging is not a reliable tool, why should users bother using it?

I don't know how tagging can be improved. But sooner or later, it has to, because of at least two reasons:

A) Theoretically, associative navigation should produce much better results than contextual search, if done right.
B) Amount of information, generated by society, grows exponentially, especially in social systems. Therefore, problem of signal/noise ratio will become more and more actual.