Read how they explained the use of tagging in MyJeeves 1.2:
The first impulse was to blur the line between foldering and tagging by merging them into topics. This turned out to be too confusing for most people. The second scenario was to overlay tagging on top of foldering, resulting in "virtual folders". This is the approach Longhorn seems to be taking - sorry, I meant Vista...which sounds far less intimidating - and dagnabit if it didn't work. So there you have it: "tags as virtual folders" is what we just launched with MyJeeves 1.2.
"Virtual folders", in reality, that is what it is.