It's used to synchronize the effect (typically delay) to the particular song. Depending on what you're trying to achieve, it can be exactly sync'ed, or at half metre, or double metre, etc.
First, you have to have some kind of a time-based-effect enabled (you can't just have it in your rig, it has to be ON)....like a delay pedal. When you start tapping the delay will sync to the tempo you tap, rather than to a pre-set delay interval.
