The standard RSS widget has this ability too.
Just enter the Tag Feed address to display Posts by Tag.
Format like so:
But this plugin also has template tags to show posts anywhere in the blog too and not just widget.
gnetworkau - that is really, really useful advice.
however, i found the default to be 'tag' not 'tags'. you can change this in settings/permalinks, of course.
a customized permallnk example is
where all I added was the 'blog' location
another customized permalink example is
where i changed 'categories' to 'topics'
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