Metadata means "data about data" and every time you tag a photo, give it a star rating, or edit the time it was taken, you've edited the metadata. In Windows XP, photo metadata included things like file name, size, and type, etc. In Windows Vista, however, there is all kinds of new metadata, including tags, date taken, rating, caption, image resolution, camera make/model, shutter speed, etc. Now, some of that metadata is created by your camera (like make/model, shutter speed, etc), but some of it is created by you.
With the Windows Live Photo Gallery, you can quickly and easily add tags and ratings. If this is the first time you've installed the program, you will probably want to go through the pictures already on your computer and add some tags to them. This can be easily done by clicking on the group of photos listed under the Tags section as "Not Tagged." You can then select a picture, or use Ctrl or Shift to select multiple photos and then "Add Tags" on the right side of the gallery. As you add tags to photos, your most recent tags will appear as you start typing in a tag, making it that much easier to tag a photo. The next time you import pictures, you can tag them on their way in - there are more details on the import process here.
In the Live Photo Gallery, you can also click on the star ratings, which are located above the tags in the right side column in the gallery to assign ratings to your photos. At the bottom right there is an option to add a caption to the selected photo.
But what you may not realize is that the tags you assign to your photos don't just help you locate and organize the pictures on your computer, the data is passed on to other services that support the metadata, too. A good example of this is flickr. By right-clicking on a photo or photos in the gallery, you'll see a "More Services" option. Click that and select "Publish on flickr." When you publish your photos on flickr, your tags and captions are supported and will be transferred automatically to Flickr, saving you from having to tag them again on the web service. But flickr isn't the only thing that supports the Photo Gallery Metadata. Since Windows Live Photo Gallery supports a type of metadata called XMP, programs like Adobe Photoshop, Adobe Bridge, iView MediaPro, Extensis Portfolio, and lots more support XMP, too.
Professional photographers may want to have even more interaction with the metadata, so for them, there is the Microsoft Photo Info tool. The tool is a software add-in for Windows that allows you to add, change, or delete metadata properties from inside Windows Explorer. It also provides enhanced "hover tips" and additional sort properties for digital photos in the Windows Explorer Details view.
Using the Microsoft Photo Info tool, you can edit images individually, or as a collection, quickly recall recent entries and location details, generate copyright notices automatically, correct EXIF capture date/time info, view EXIF properties, and preview images by double-clicking the photo's thumbnail.
(Source: Windows Live Photo & Video Blog)