It allows people to read only the things they are interested in; essentially it could provide multiple topic-based discussion areas. I don't think one can look at how tags have previously been used on LW to answer "why would accurate tags be useful?", since the tagging situation is pretty horrible. On StackOverflow the tags can be edited (and are, all the time) by "high"[1] reputation user and they are used to filter content extensively. However the infrastructure there is a little different, since users can select "Favorite Tags" and "Ignored Tags" to control what shows up on their front page. (Granted that the comparison isn't necessarily a good one, since StackOverflow is much higher volume, and it has a slightly different purpose.) [1]: 500 reputation, but reputation is basically received 5 or 10 per vote (depending on the situation), so it is actually quite low. But the possible tags come from a finite set, and one needs 1500 reputation to add a new tag to this set.

It would make research for writing new articles. It would help people interested in a particular topic read more about it. I use tags a lot and even as poorly used as they currently are, I've found a lot of interesting material through them. Also most importantly it would be a step towards better indexing.