Labels are used to group objects for a variety of purposes.
Frequency capping for ad units: Use labels to set frequency caps for particular sets of creatives when they're served to particular ad units. You apply the labels to both creatives and ad units.
Competitive exclusion: Categorize line items to prevent two line items in the same category from being shown at the same time on a webpage. For example, you could categorize line items as 'auto' and prevent two different car companies from showing ads together.
Ad exclusion: Categorize line items so that you can prevent them from being delivered in emergency situations. For example, you can use ad exclusion labels to prevent airline ads from being displayed next to news articles about a plane crash. Ad exclusions also require that you make changes to your ad tags.
Partner management: Categorize your partners by label and run reports to see various ad serving activity by these labels. This option available only to DFP publishers with partner management or DFP Video enabled in their environment.