Welcome to the forums, sarcanon.
Your question is well though out, which is both rare and appreciated.
If you google "jriver tagging" you'll find quite a bit of info, including that wiki article...
But in short, it works like this:
MC is a database; all tagging information is always stored inside MC's proprietary database.
In addition, MC can write tag information to media files. In order for this to happen, a couple of things must be true:
1. MC must be configured to be allowed to write tags (this is the "Update tags when file info changes" option).
2. For each and every field, there is an option to write that field to file tags or not. If that is not enabled, the info will only reside in the database.
Finally, if MC is configured to write tags to the media files, the media file itself must support tagging. WAV files have very limited tagging support. ISO files have none at all.
For those sorts of files to be tagged with any arbitrary info you want, you can configure MC to use "sidecar" files for those file types. In that case, MC will write an XML file next to each media file, to contain its tag info that the file itself can't hold.
MC has two reciprocal commands (accessible via right-click menu): "Update library from tags" and "Update tags from library". When these are invoked against the selected files, MC will either read the tag information from the file and replace the library data with what it finds, or write the library data to the file, overwriting what is in the file currently.
I always suggest that people configure MC too always write all the tag information they care about to the media files (using sidecars as necessary, as it is for video files for example). That way, if the file is shared, or moved to a different PC, the metadata goes with it. Likewise, if something happens to your library, you can retrieve the metadata from the tags.
Be warned, there are some fields I would
not write to file tags. "Last Played" is one example. If you write this to the file, the file will be modified every time you play it, which means it will always be dirty for backup. In my view, that is worse than losing the "Last Played" data if you lost the library.
Regarding synchronization, if the appropriate options are turned on, MC will constantly update file tags as you make changes in the database. If you want to try to do sneaky things and update tags in the files and are hoping MC will automatically synchronize those changes too, be careful, but you can turn on "Run Auto Import in background" and enable the "Update for external changes" option. That way, MC will periodically note that the files have been modified, re-read the tags, and update the library as needed (although it will not
delete data from the library just because you have cleared a tag in a file).
I hope this helps.