Question about "FindGameObjectsWithTag"

When I use “GameObject.FindGameObjectsWithTag”, does the engine iterate through every object in my scene to determine what matches my search criteria? If I had a Max file that I dropped into the scene, are those objects included in that search? If the Max file had say… 1000 little meshes in it… Would the search iterate through each mesh or are all those considered as a single “GameObject” with a single tag?

Single GameObject as long as they are submeshes on the same object. If, in the Hierarchy, you see a tree of things, each of those are separate gameobjects, because you can see them, move them, delete them. In which case you probably want to combine them as much as possible. And why you don’t want to use any ‘Find’ API in an Update or OnGUI function.