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Navigate to the root Site Settings
Click on “Term store management” under Site Administration
Expand “Site Collection” and expand children until you get to the term set you would like to manage
Hover over the term set name (in this case “Tags”) to open the context menu:
a. You can add new terms to the top level here
You can manage existing tags by hovering over them and clicking on the arrow to bring up the context menu
a. Create term in this context means create a child term under the selected term (nesting)

b. Delete Term will remove the term
You can also click on the name to rename (same is true of the term set name)