At the moment, tags cloud displays current tags in contacts or leads. To delete a tag from leads or contacts, select a card you need, go into it and delete a specific tag, or remove it from the "List" view in the "Leads", if it is a lead card, or remove it from "Lists", if it's a company or a contact.
You can do it by using multiple actions. Find contacts with the tag you need in the search and filter bar, mark them and massively remove the tag from these contacts.
In order to remove the tag completely, you should select "Search and filter", "Management" and delete it there. This option is available only to the account administrator. Please note, if all leads or contacts with a particular tag are deleted, this tag will not be deleted.