re: Tagged geometry: Might have been a case of exploding a tagged group or component? The contents of the object inherit the tag. This isn’t always made clear in some tutorials. It has some benefits but when you explode an object the next step should be to untag the geometry while it is still selected.
Another possibility is it came in from the 3D Warehouse that way. Or if you import a CAD file the geometry will come in with tags from the CAD layers. TIG’s Default Layer Geometry, which is what I used, makes quick work of fixing the incorrect tag usage. You can get that plugin from Sketchucation.
Modifying the geometry of your terrain shouldn’t create a bunch of individual textures. Or were you usiing some extension to do that modification?