"The Tavern is the place where your folk celebrate your victories. A good feast is good income. Upgrade the Tavern so that more of your people can celebrate allowing you to increase your income."
A city can have up to 4 taverns. These are the places your villagers and knights alike can sit down for a drink, bringing in some extra money. Over time, taverns will accumulate gold up to their maximum hold. You can click on these taverns, whenever there is a floating coin above them, to collect however much gold they have made so far. Upgrading taverns (or building new ones) increases their gold income and the maximum amount they can hold before it needs collecting. You start off with a maximum of two taverns, and at throne room levels 3 and 5 you are able to construct another one.