[svn] How to properly create an SVN tag from trunk?

You are correct in that it's not "right" to add files to the tags folder.

You've correctly guessed that copy is the operation to use; it lets Subversion keep track of the history of these files, and also (I assume) store them much more efficiently.

In my experience, it's best to do copies ("snapshots") of entire projects, i.e. all files from the root check-out location. That way the snapshot can stand on its own, as a true representation of the entire project's state at a particular point in time.

This part of "the book" shows how the command is typically used.