From Hdwiki
Google Apps Labels
The online web interface provided Google allows for a different system for organizing e-mail called "Labels". Multiple labels can be applied to any e-mail or group of e-mail messages allowing for greater sorting ability than folders. Should you choose to use an e-mail client, you will be able to use folders in that client to sort your messages.
Labels Versus Folders
Labels allow for the creation of three dimensional file systems. Each item is free to exist in as many location/labels as possible. The limitations of folders versus labels becomes clear when applying it to a real life object.
Example
If you have a document on an orange tree you could file it in the folder "citrus." You would have to remember when you approach your folder system that in order to find the orange tree document, it is under citrus.
Labels allow for a more dynamic system. You could take the document on an orange tree and label it as "citrus" "tree" "fruit" "round" "Florida" and "plant." This way you will always find the exact copy regardless of which label you placed the item in. Had you wanted to do this same task under a folder based system, you would need to duplicate the document and place it in each folder.
This creates for a much more efficient system.
