Think of Tags as a way of partitioning your data. The best example of this is Financial vs Order. When you create a report, one of the items that you have control over is the Tag. Take for example a sales report. You could setup a custom analysis view where column one is set to tag financial and column 2 is set to tag order. In that way, you can see the value of actual sales and future orders.
In NV2, you create accounts and place them on reports either by creating the account under one of the nine account types and then assigning the account to a report or by accing the account directly to a report. What numbers that account displays on the report is governed by the tag and date settings of that report.
On to the audit trail.
The audit trail records everything. So yes, I can tell you whena change or deletion occured, who did it, what they did, what macine they did it from and what the transaction looked like before it changed or was deleted.