Labels are very much like folders. You can use them to organize your mails into any categories.
Create a label
Look for "More" on the left panel as shown below and click on its down arrow .
Scroll down until you see "Create new label". Click on that and type the name of your new label and click "Create".
Or select any message you want to label, go up to the top of the page and select the "Labels" icon. Then, click "Create new".
When you view any message, you can simply click on the "Labels" icon to create a label.
You can also drag a label from the left panel to any message as seen below. A folder named "KKU" is being dragged to the unread message on the right.
Edit or delete a label
Hover the cursor over the left panel and click the down-arrow next to the label. There you can change the color, show or hide it in the label list or message list. Edit, remove or add sublabel can be selected from the menu.
Another way to edit labels is go to "Settings" and select "Labels" tab.
To create sublabels, click "Create new label" and simply type "/" (slash) after the name of the main label. For instance, a sublabel "Engineering" is created under "KKU" as shown below.
Or type in "Engineering", click on "Nest label under:", and select "KKU" as shown below.
Tip: You can automatically use "Filters" to label incoming messages.