Step 1 - Click on a GameObject. At the top of the Inspector Window is the drop-down menu for "Tag". Click on the drop-down menu and select "Add Tag ..."
2. Then click the plus sign to create a new Tag
3. Make sure every tag you want to use has been created. These are case and spelling sensitive so keep to one theme (e.g. every tag is capitalized or every tag is all lowercase letters)
4. TAG YOUR GAMEOBJECT. By far this is the most often forgotten step. Steps 1-3 just created a new tag, but did not assign it to any GameObject. You need to click on the GameObject you want to tag, and select the new tag from the drop-down menu.
Simple example of two objects colliding and printing a message to the Console Window (neither has "is Trigger" checked).
Example of colliding with an object, checking it's tag and doing two different things depending on the tag.
Example of hitting a trigger, and using an if statement to respond accordingly.