Tapping is the short name of fretboard tapping or finger tapping: the act of tapping the fingers against the strings in order to produce sounds, rather than striking or plucking the strings. Specifically, it usually refers to two-handed tapping, that is, tapping involving both the left and right hand. It is not clear who discovered tapping, but it was certainly popularized, but not discovered, by Eddie van Halen. A rather different kind of tapping, which is a whole playing style rather than a technique, was probably discovered by Jimmy Webster but is used primarily by Stanley Jordan, who is currently the style's only virtuoso. Therefore this book dubs the two kinds of tapping Van Halen tapping and Jordan tapping, although Stanley Jordan often calls the latter the touch technique.
Van Halen tapping
Van Halen-style tapping is by far the most common type of tapping. It's generally used as a lead guitar technique, especially during solos, but only a small number of songs are entirely tapped. The player's picking hand leaps up to the fretboard and begins tapping notes, which are usually hammered-on and/or pulled-off to frets held by the fretting hand. Players who do not use a pick have an advantage here because players who use one must get the pick out of the way in order to tap with their fingers. Some players do this by tucking the pick between their fingers; others simply use the middle or ring finger to tap. If you wanted you could keep a pick in your strings at the top of the neck of the guitar were the nut is and when you get ready to tap throw the one in your hand on the floor and when you finish quickly get the other one from between the strings. Here's a quick note on holding the pick just with your index finger and tapping with middle finger: The advantage here is that you are still able to throw in some finger picking style stuff and quickly can get back to work with the pick. It will be faster changing between pick/no-pick than the in-strings-keeping mentioned before. What if you tap multiple times in one song? Plus you won't lose the pick on the floor.
As mentioned before, this is a whole playing style and a whole book could be written about it. However, it is largely unexplored territory. Stanley Jordan has been using this style for decades, but precious few others have used it much. The principle is the same as Van Halen tapping: instead of striking the strings with the picking hand, the player hammers on them. The biggest difference is that the left hand plays similarly, hammering on strings to sound notes rather than to hold strings down to be pulled-off to. The second-biggest difference is not in the technique itself but its use: it is generally used for entire songs or sections of songs rather than a small fragment of the song. The player never need to worry about having to use a pick and can use both hands freely. Stanley Jordan himself has written an article on this playing style.
Taken from http://wikibooks.org/wiki/Guitar:Tapping