Labels enable you to see which subjects are the most important to end users. You first have to create classifications in the Label screen and populate them with categories. Then, you'll be able to assign articles, events and dialogs to those categories. Once all the articles have been assigned, you'll be able to see in which categories the most questions have been asked by using the dashboards.
When you apply a category to an article, event or dialog, you have "labelled" it.