A folksonomy is a classification scheme ("taxonomy") which is built by a broad community or people ("folks") in order to categorize various types of Web content - pages, images, audio-video, and so forth - through the application of "labels" or "tags" in order to better enable users to search and find content corresponding to their interests. Folksonomy tools usually also enable one to see what user created or applied what tags, so that they can discover people whom they feel an affiliation with and then further explore those people's other interests as reflected in their overall tagging patterns. Folksonomy provides an alternative to the mechanical application of search engines like Google, as well as provide an alternative to top down and usually very hierarchical classification systems built by "experts" which everyone must rely upon with no possibility of modification.
THDL is not currently using folksonomies, but we are actively considering how to begin doing so in the future.
See the Wikipedia article on Folksonomy for a short introduction.