Opening the action drop down at the top right, and selecting Preferences will open the preferences window. Alternatively, you can open the preferences window by pressing ⌘, while the popover has keyboard focus. Pressing the ? button will reveal some additional info about the setting.
In the General preferences pane, you can control the behavior of the popover.
Showing the general preferences pane
Uncheck Always Show Popover, if you want the popover not to show automatically after dropping your files and folders. This is handy, if you first configure all your settings, e.g. by selecting a profile, and using execution option Immediately. This way you simply drop your files, tagging them silently in the background. You can always open the popover by primary clicking on the icon in the menu bar.
If this option is checked (default), then the popover will remain open until you press the Close button or the esc key. This allows for easier drag and drop handling and tag assignment. If this option is unchecked, the popover will close as soon as you click somewhere outside the popover or another window gets focus.
The Tags pane in preferences, let's you maintain the tags that you have imported or created within the app.
Maintain your tags within preferences
If you imported your tags during first launch, the app will regularly import your Finder preferences in background to keep the list of tags up-to-date. You don't have to do anything. If you want to import your tags manually, press the Import... button, which will open the import window with com.apple.finder.plist preselected. During import any existing tags are updated and any missing tags are added. Tags that were created within the app are not affected. If you want to start with a fresh list of tags, that only contains the tags that are available in Finder preferences, set the Overwrite checkbox before import. This will delete all tags in the app and import all tags from Finder preferences.
When typing into the tag field in the popover, the suggested tags are case-insensitive. That means, if you start typing with a lowercase character, it will suggest any tag that starts with that letter. For example, if you type 'r', you might get 'Red'. If you generally use lowercase tags, then it's recommended to enable this setting, as this will allow you to create new lowercased tags, even if there is already a tag starting with the same but capitalized letter.
Creating new tags is simple. Press the + button below, give it a name, select a color and press Enter.
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Deleting tags is even simpler. Select the tag, that you want to delete and press the - button. You'll be asked to confirm the deleting.