Relevancy works the same way that a Google search works. Rather than listing the newest posts, websites, and images, google shows you the most relevant posts, websites and images for your search terms.
Now, Etsy search works the same way which should be great for buyers and sellers alike. Rather than re-listing your items to get seen when people do searches, you'll use your tags and titles to get seen.
When someone does a search on etsy for "silver hoop earrings" for example, etsy will first show the items that have the most "relevant" tags and titles... the ones that are more likely to be what the buyer is searching for. Then they'll show items that are less relevant, maybe gold hoop earrings, or silver earrings that aren't necessarily hoops. They're shown on later pages, because they're less likely to be what the person is searching for.
So, all you need to do is think about what people are searching for to discover your items, and make sure your listing's tags and titles are relevant to that search. The first three words of your title are the most important... so make them count. If I had a title that said "amazing big pretty silver hoop earrings" that will be less relevant than "silver hoop earrings, amazingly big" so I would want to switch the words around.
Use all of your tags, and don't waste them. You don't want to be "relevant" for a search that has nothing to do with your item. I wouldn't put "casual evening attire" in the tags for silver hoop earrings, because that's probably not what people are looking for if they search for "casual evening attire". I might use that tag for "sterling" or "recycled" instead in case people are looking for sterling silver hoop earrings, or recycled silver hoop earrings.
Does that make sense? I hope it does!!