Geo-tagging is a way of adding location information about where a picture was taken so that they can be graphically displayed on a map. I have started geo-tagging my pics on Flickr and you can see the map of my pictures at this link http://www.flickr.com/photos/pantone801/map/. My map does look a bit sad though because I have not traveled to that many places, but hopefully there will be lots of little pink circles on my map in the future.
I think this is going to be great for photography. Sony have recently released a GPS unit that can attached to a camera that logs where pictures have been taken. And there are a tonne of new applications for geo-tagging such as microformats, geoRSS, HTML Geo-Encodings and ICMB. Once I discover the features of these applications I will let you know.