Taunting is a specialized system that deliberately leaves you open.
Basically, it is a meaningless action that is only for the purpose of entertainment, but in various circumstances, it may hurt your opponent’s meter, or do a little damage.
The taunt is different for every character, and depending on the game, you may be able to cancel the recovery with other actions (this may even be useful; a particularly egregious trick to kill the opponent’s meter in KOF ’96 involves taunting and calling off the taunt repeatedly).
Taunts are very effective for baiting chickens (not good turtles), but overdoing it ticks people off, and can lead to real fights. Some games limit how many taunts you can use (e.g., in the Street Fighter Alpha series, you can only use one per round unless you use Dan). Some games these days don’t have taunts at all (such as the Arcana Heart games).
Some games allow you to taunt after you achieve a knockout. Some people hate this as much as they hate corpse kicking. In some games, though, players just do this as sort of salute, and keep the audience entertained.
Some people cannot stand taunts whatsoever, so as with all touchy issues, it really is best to know how the other player feels about the issue. If in doubt, keep it to a minimum.
The very first game with taunting used it to partially deplete the opponent’s power meter. For this reason, unlike most other series, taunting is an important strategy.
Hibiki Dan, being a parody of many elements from the Art of Fighting series, is inseparable from the idea of taunting.
Over the course of many games, he has built up quite the taunt-fu: he can taunt as often as he likes, he has a crouching taunt, an air taunt, a taunt special move, a taunt super special move, and a long-range projectile (a signed photograph!) that is so slow that it is basically a taunt.
In some games in the series, you can toss aside your weapon voluntarily as a taunt.
In Samurai Shodown 2, there is an extra kind of taunt that allows you to temporarily turn into a doll.
The taunt is called a “Personal Action”, and gives you certain enhancing effects if you use it in the proper manner. Available in 2nd Impact and 3rd Strike.
There are two taunts for each character that you can only use right after obtaining a knockout, performed by hitting forward or backward plus the start button.
Also, on a streak of 10 straight wins or more, a taunt will add on to the opponent’s power meter.