To my judgement, the second approach is more powerful than the first one
You get to see all categories and then respective tags under those categories more clearly, but it is missing one thing which is READABILITY. If you can follow the same approach and make tag's visibility as good as first prototype has, your second prototype would become more useful and effective. Try adding some vertical and horizontal space to them - and - differentiate between the colour of categories and tags.
for the X (cross) next to tags, in first prototype, the landing space around X makes it look easy to delete tags but in second prototype, X is alone and tiny and we perceive it would be hard to click on it. Improve on this aspect.
Another question which you need to ask is how much value do these categories have? Would it be okay to place tags without categories? or is it important that those categories be seen DISTINCTIVELY and eye be able to spot them and visually isolate them from the tags they have? Sometimes categories could be important to select the right tag but once tag is selected, categories may not hold value any more. In case categories are not important, your first prototype would be more sleek approach than second one but in case Categories have value and they keep their value among tags, second prototype would be better.