Classes and Locations are not going away. But using Tags does give you an alternative option. It's great for folks on Simple Start and Essentials to use tags with out having to upgrade to Plus or Advanced.
I did edit a tag by moving it to another tag group and it kept the underlying transactions.
I see what you mean about the confusion of classes. In my case I was explaining tags (ie I teach OneNote class, etc). Setting up tags is new and I'm sure we will continue to see best uses cases for them.
I like the idea of having a new reporting skill in your toolkit when needed.