Inline tagging is a very powerful feature which comes in useful more often than not. When the cursor is inside a tag, and you press space a popup menu will appear containing the valid attributes. Where possible those attributes will have a submenu which will contain the legal values for that attribute. Should you actually want the space character to be inserted into the editor just continue your typing and it will be inserted. However if you only wish to insert a single space character you will need to press it twice.
The inline tagging works from the DTD for the current page, as such if it isn't available then the inline tagging will not work. The menu is also accessable via the editor popup menu when clicking on a tag.
Due to utilising the DTD support the inline tagging will only work if the DTD could be parsed.