Hi Yuval
The help is still a sore spot (I'm still working on it).
The "Tag palette" can be useful when you have a large number of tags and you only need 4 or 5 tags for the current tagging task.
Let's say I import 50 new images to the index, first I will drag the tags I'm going to use from the "Tag Tree" to the "Tags Palette" and then it will be easier for me to tag the images (since I don't need to scroll the "Tag Tree" Up and Down.

Regards,
Asaf.