Tapping out is basically just releasing Airmen/Guardians from formation. The way that you do that is by “tapping” them on the shoulder. It's also when you get to hug your new Airman for the very first time after so many weeks!
The “Tap Out” comes at the end of the Coin Ceremony on Wednesday and after the Graduation Parade on Thursday. The Airmen/Guardians will remain at attention until someone either comes up and taps them on the shoulder or hugs them.