Here is the structure:

1. menu item. domain.com/tags/
   Tags. Compact list of tagged items

2. Settings. The menu item settings include various tags

I use tags to navigate though tagged articles. There is no sense to make menu item for each tag since tagged items solves the task.
However, I noticed a little problem with router in breadcrumbs:

Home = domain.com/
Tags = domain.com/tags?layout=list
Tagged item = domain.com/tags/plugin

I suggest considering of removing ?layout=list from the URL if a menu item exist. A change in Joomla router.
Joomla 4.2.3

Thank you.