module Taggable 
  def self.included(base)
    base.extend(ClassMethods)
  end
  module module ClassMethods
    #methods here
  end
end

This is a part of a bigger pattern which is shown below:

module ModuleA
  def self.included(base)
    # add class methods from ModuleB
    base.extend(ModuleB)
  end
end
 
module ModuleB
  def act_as_hello
    p "hello from module B"
  end
end
 
class ClassC
 #class body here
end
 
# include moduleA in classC
ClassC.send(:include, ModuleA)
 
class ClassD < ClassC
  act_as_hello
end
 
classD = ClassD.new

The pattern is used often when developing plugins with ActiveRecord. What we gain by inheriting from ClassC (class ClassD < ClassC) are instance methods from ModuleA. This is done by:

ClassC.send(:include, ModuleA)

Moreover since ModuleA is included in ClassC, ModuleA’s initializer def self.included(base) will be invoked at the time ModuleA is mixed with ClassC. The invocation will call base.extend(ModuleB). In this case base represents ClassC which will be extended by adding class methods from ModuleB. The ModuleA’s init method is shown again below:

def self.included(base)
  # add class methods from ModuleB to ClassC
  base.extend(ModuleB)
end

At the end our ClassD has now access to all class methods defined in ModuleB. act_as_hello will be called during ClassD initialization:

class ClassD < ClassC
  act_as_hello
end