I have played around with the Tags and I guess what confuses me is the tags seem to be used to mimic subnotebooks. If you had subnotebooks you really would not need the tags. One of the big problems I had with OneNote is it did not handle subfolders/subpages very well. Yes, you could add a subpage but it seemed to only go one level deep.
What you have in the tags and subtags is exactly what you should do for the folders and let the tags be used for simply tagging your notebooks. If you take a look at "Ultra Recall" it allows you to create an unlimited number of folders/subfolders and makes organizing your data very easy. The problem with using the tags/subtags in EN is it seems to be double the work and take twice the space on the left. If I could just create a subnotebook I really would never need tags especially since the searching is so powerful. To me the tags are just another way to group my notebooks but if I could have subnotebooks I could group them from the start the way I want.
Here is an example of the Subfolders I have setup in Ultra Recall. This is just a small example as I have well over 100 subfolders of subfolders of data.
What is so incredible about EN is the ability to have all your data on the Desktop, Web and iPhone and have it always in sync. I have not seen any other program be able to do this.