Yes, possibly a similar result could be achieved with tags. The difference seems to be the convenience. I do not use tags but they remind me of something like stickers you put on your CDs (or books) which are placed in a mixed way altogether on a single long shelf in your music room or library. The other solution (with some kind of "third level") would mean something like different shelves in your room (e.g. one for Classic CDs, one for Pop etc.) so that you can put (and search) a certain CD (book) directly in a specific shelf.
So you could "enter" your virtual library (= topic/project) and go directly to the "shelf" (for example by clicking on a tab) where you have placed exclusively books related to local history and genealogy.
For my needs it could be structured for example in this way:
The (big) Topic (or "Project" as called by denswier) would be titled for example "Language" and its elements are "Wörterbuch" (Dictionary), "Grammatik" (Grammar), Links, Diverses (Various) and Blog.
Of course a further refining by tags would/should remain possible too (e.g. a tag for all documents in the element "Dictionary" that are adjectives).