Two tags that I've been using more and more over the years are <acronym> and <abbr>. Well actually, <acronym> is the only one I've really been using. Sometimes I type in acronyms manually, but for the most part I have a script that parses a specified set of acronyms and adds a title attribute to them so they show up like this: HTML, XHTML, NG, CDB, WWW, ETC. I have about a hundred acronyms listed, and they're all acronyms, I think... so when is the abbreviation tag actually used?
It turns out an acronym is a term that is formed from the initial letters of a longer word or phrase, is pronounced differently from the original and can be pronounced as a word. NASA is an example of an acronym. An abbreviation, on the other hand, is pronounced (at least partially) the same as it's initial form, though it is written differently, such as Mr. instead of Mister. In fact, the ETC I have included above is not only an acronym, but also an abbreviation for Etcetera. The tool-tip displayed for ETC is really for the abbreviated version, not for the words that E T & C really stand for as an acronym. Most words can be abbreviated, as can places, dates and names. Beth, for example, is an abbreviation of Elizabeth, but most probably you won't need to add an <abbr> tag for names. I mean, if you call your friend Beth, why would you need to explain to the world, through a tool-tip, what her real name is? As for Bob (I am so called), it's one of few names that is both an acronym and an abbreviation. Or is it? Can Bob really be an abbreviation of Robert? With Beth, the name is a shortened yet similarly pronounced version of Elizabeth, but with Bob and Robert the similarities are much less! With Bobby, though, it's clearly an abbreviation.
To complicate matters a bit, there are also initialisms. All the acronyms I've listed above (except for ETC) are actually initialisms. They are much like acronyms in that they are made from the first letter in a string of words, yet they cannot be pronounced as a word. Yet there is thankfully no tag for initialisms, so they are logically grouped as acronyms, as they are certainly not abbreviations. So, to sum things up, acronyms are made from the first letters in a string of words, abbreviations are shorted forms of words, and the majority of acronyms are really initialisms, acronyms that cannot be pronounced as a new word. Also, acronyms are a subset of abbreviations, so all acronyms are really abbreviations, but not always vice versa!
Did you get any wiser? ;)