It crowds out more valuable tags.
While Trish's answer covers a lot of factors that could cause a tag to fail to provide positive value to the site, there is one way that tags can actually provide negative value to the site (that is, actually be harmful rather than simply irrelevant).
There are two limitations on tag "slots". First, a question can only have a total of 5 tags. If a tag that provides little or no positive value (as described in Trish's answer) gets chosen over some other tag that would have helped an expert find and answer that question, then that tag harmed the question, and by extension, harmed the site.
The other limitation on tag slots is that the tag on the question with the most weight (that is, the tag that has been used in the most questions) gets bolted onto the question title for the purposes of search engine crawlers. If a lower value tag ends up in this position over a higher value tag, it can make it harder for people searching Google/Bing/whatever to find that question, and by extension to find our site. Again, this harms the question's ability to get answers and the site's ability to help people.
In particular, the search engine tag slot may be playing a role in our diminishing number of questions about less-common systems and increasing focus on D&D 5e. Consider these four questions: 1 2 3 4. In each case, when viewing the question you can see the highest weighted tag before the question title, and in each case it's something generic rather than the name of the game system, which would actually help people find the question:
An important aspect of this is that because the search engine slot is held by the tag that appears on the most questions, as a tag gets used more and more its potential to harm the site by claiming this slot goes up. It's easy to look at a tag that's only on 6 questions and say, "Eh, we'll leave it be for now and see how it gets used." A tag that's on 1000+ questions need to be providing a lot more value to justify its existence.