Can anyone explain the difference between TagUI and Taxonomy with example?
The taxonomy manager allows you to create a taxonomy, which is basically a tree of categories to sort your information, and is usually defined by a larger records management activity within the organization. The taxonomy only defines the available categories, but it does not affect content items just yet. The taxonomy is usually managed by a "power user" or "site administrator".
The TagUI allows business users to tag individual content items with metadata, which could be plain text or select lists. One or more of those select lists can be sourced from your taxonomy tree. Sometimes your taxonomy is only applicable to content items of a particular type (e.g. only news articles). The TagUI is flexible enough to allow using a different entry form depending on the location or type of the asset being tagged.