The main keys to Etsy's search are:
If you want to be relevant for a certain phrase, that phrase must be in your title and in your tags as a single tag. So if you're looking to be relevant in the search "aqua fabric" you need "aqua fabric" in your title and as a tag.
There is almost never a need for single word tags, as they can be included in other tags. So if you've tagged "aqua fabric," don't bother tagging "fabric"; it's already there.
Longer, more specific phrases are good.
You must research to see what people looking for your items are actually using to search for them. Google's keyword planner tool can help with this, and so can the drop-down search suggestions that Etsy provides when you start to type something into the search bar (these are things that are searched relatively frequently on Etsy). So if I start typing in the search bar "fabric," I get:
fabric by the yard
cotton fabric
fabric bundle
as suggested searches. These might be good things to incorporate into some of your tags and titles.
A search that I start for "aqua fabric" gives me:
Riley Blake aqua fabric
coral and aqua fabric
coral aqua fabric
"cotton fabric" gives me
cotton fabric by the yard
quilting cotton fabric
100% cotton fabric
floral cotton fabric
these would all be good phrases to start adding as tags and titles.