When you Delete a tag using finder, what happens to the files that had the tags?

It only removes the tag from the file. Tags are metadata assigned to the file. When you delete a tag, it should remove the metadata from the file.

The Tags view in Finder is a search, so when you deleted the Tag, there was nothing to match, so the previously found documents could not be found and vanished from the view. The files are still wherever they were stored.

If you control/right click on a tagged file, the secondary menu will show a menu item Tags… . Select it. This will open a Tags panel that shows the tag or tags already set on the file entered as rectangular lozenges. Place your cursor behind the last tag entry, and backspace until they are gone. Press Return to finalize this process, and the Tags panel disappears, just as the tags do from the selected file(s).

Nothing happens to the previously tagged file(s).