Labels

In the New Blogger Label is the new Category.
Labels are used to tag posts so that all posts with one label can be brought up immediately for viewing.
Labels can also be used to increase traffic to your blog as they double up as Technorati tags.

OPTIMIZING LABELS
You can label your posts with any name you want. However to increase traffic to your blog I suggest three important factors :

1. APPLY RELEVANT LABELS : The Label name should correspond with the content of the post. For instance I could label this post "Youtube" since it is one of the top tags at Technorati and hope to get a lot of traffic from there. But that would be spamming and the traffic will never return after being disappointed on getting no information on Youtube!

2. RESEARCH YOUR LABELS : Before applying the label name see the posts trend on the label. For this you can use Technorati Charts to see how the the number of posts varies over a time period on a tag.

3. NUMBER OF LABELS : Too many labels cause duplication of content and pages and there is more danger of landing on Google's Supplementary Index. I would suggest to apply only one or two labels per post to get around this problem