1) What does regulation mean in practice? Is it like they want to register people who invest or something? Is it all about taxes?
For some government regulation means to them is reaching to businesses especially cryptocurrency exchanges and requiring all its customers to be identifies. I also know some local Bitcoin wallet providers before you can withdraw or deposit a big amount you are required to verify your account and link your wallet address in your name. And yes part of it is because of taxes with Bitcoin being a anonymous currency the government is finding a way to stop the abuse of it.
2) Why does governments want to regulate crypto?
The answer to this question is also found above ^