Some text from Minecraft Wiki used under Creative Commons Attribution-Share Alike License 3.0
|First Appearance||Indev (July, 2013)|
Name Tags must first be renamed with the use of an Anvil before being applied to a mob (which, as of 1.8, costs 1 experience level, and on consoles costs 5). To use a name tag, simply hold the item in your hand and right click on the mob to name it. Once done the new name will display.
In the console versions of Minecraft (e.g. 360, One and PS), to name a mob, hostile or docile, rename it with the name tag then left trigger the mob. The name will then appear above the chosen mob(s). A reason Name Tags are not preferable is that the player cannot remove the Name Tag without killing the mob or replacing the Name Tag with another one.
If a mob is renamed Dinnerbone or Grumm, the mob will be flipped upside down (on console versions, only Dinnerbone works). This can be done by repairing a Name Tag with an Anvil . The Dinnerbone Name Tag is an Easter Egg for a developer with the same Minecraft name. You could also rename a Spawn Egg Dinnerbone. Dinnerbone's cape turns him upside down.
Right click Mobs with the Name Tag copy and it will flip their model upside down. This also works with the name "Grumm", another developer.
Naming mobs is usually the desire behind obtaining name tags. They are useful because name tags will prevent the named mob from de-spawning, such as when the player moves too far away, for example. This makes it a great tool for hostile mobs which disappear often, or for just naming neutral mobs and passive mobs such as horses to save them for the player to use, no matter how far away they are or how long ago they have been "rendered."