I have a website similar to craigslist for online classified media. I redesigned a list of items now using semantic-ui and labels for the geography. Would it be better to use breadcrumbs e g
Georgia >> Columbus instead of labels?
The answer depends on how central location is for the service.
In this case, online classifieds, it is likely to be highly localized information. Where the showing is, where the seller is, where the business is... distance from the reader to the advertiser is often critical. Thus a separate UI element that more clearly delineates the location of the advertiser is probably important.
Even if internally you represent the location data as tags, that doesn't mean that your interface cannot present it differently. You might put the location more prominently. You could have a first-class UI element to filter the results to a certain location that presents itself as 'choosing a city' rather than 'filtering a tag'.
For digital goods or those shipped to you, it's just another bullet point. Many users will not care where the seller is. Then lumping it in with the other tags (if it is included at all) seems appropriate.
As far as how to store the tags, I do agree that 'Columbus, Ohio' is not the same as Columbus in another state so tagging the full City tag rather than a separate State & CityName tag. Again... how you represent the UI to the user does not have to depend on your exact internal tag structure, but internally I would recommend storing a unique tag per city, not a generic 'CityName' tag that might get re-used for different cities. That's more a database / data structure decision rather than a UX decision.