The idea is especially relevant with the increased use of the Internet by consumers. It's one of those simply, but powerful ideas that I really liked when I first heard about it.
While I still like the idea, the words "long tail" are beginning to annoy me a little bit and I just don't know why!
It gets back to the whole jargon thing. I think the "long tail" has gone the way of other overused MBA-ish phrases such as "adding value", "competitive advantage" etc. etc.
The problem is I don't disapprove of jargon, and I recognize that sometimes the use of jargon is actually the quickest way to explain/understand an idea, or just a way to relate with someone about shared experiences; but because it's misused so often by people who don't quite understand the concept (or sometimes just people who I happen to think are morons), the word starts losing it's impact.