As you surmised, a tachometer measures the roational speed of the something in Revolutions Per Minute (RPM). In this case it's the speed of the propeller (and the engine since the prop is spinning at the same speed as the cranksaft of the engine. This isn't always the case, as some props - such as with a gear driven prop on an electric motor - spin at speeds different from the engine/motor).

First of all, look at a plane's recommendation for an engine, then look at the specs for the engine that you have decided to use.

If you look at the specs for an engine - not the specs of the plane - you will find what the manufacturer suggests as the proper engine speed for best operation. Choose a prop that allows the engine to run within the recommended engine speed. A tach is very helpful to ensure that you don't run the engine too lean, as you can easily see what the peak RPM is and then richen the mixture to reduce the RPM by 200 - 300 RPM.

Good luck!