I first heard about Twitter hash tags from Raven, who came up with a list of project management hash tags.

These tags allow you to search for specific Twitter content, like this.

Twitter tags are a mechanism for identifying content of a certain type to an interested group.

Hashtags were developed as a means to create "groupings" on Twitter, without having to change the basic service. The hash symbol is a convention borrowed primarily from IRC channels.

You can see some interesting usage patterns of hashtags on twitter here.