First, the term "tanago" is used here pretty loosely. The very small hooks and very short rods are used in Japan to fish for several species of small fish known as "tanago." They are thus tanago hooks and tanago rods, but here in the US it is not "tanago fishing" - which is like "bass fishing" (fishing for bass) or "shark fishing" (fishing for sharks). There are no tanago in the US. Tanago rods and tanago hooks are used here for microfishing (fishing for any small fish, or more precisely, species that do not reach one pound in weight).

Regarding bait, most people seem to use the smallest speck of worm. Some use the smallest speck of Berkley Gulp. I've used the minnow bait that comes in tubes successfully for some species, and others don't give it a second look. I've heard of several people who use small bread balls for shiners. I have also caught shiners on size 26 flies.