> Is muting a note simply placing your finger on the string? because ive
> noticed different "chic" sounds by moving my finger down the fretboard,
> do tabs take advantage of this?

In it's most basic form, yeah. You can either use the right or left hand to mute notes and it's anything from slightly 'deadening' and sound to completely stopping a string from ringing on.

Tabs are pretty unreliable for reading music cause everybody who writes them has their own way of indicating certain ways to play.
Your best bet with tabs is to listen to the original sound file and use the tab as just a guide.
Sometimes a mute will be shown as an 'X'... either above, below or right on the diagram itself.