In MS Outlook, you might have stored email you want to keep in folders. In Gmail, you use labels to categorize your email. Labels are like folders, but with a twist: you can apply multiple labels to an email, then later find the email by looking in any of its labels.
You can also:
Open a label on the left of your Gmail window to see all email with that label (just like you used to open a folder).
Nest labels within labels, just like you did with folders.
Search for all email with a label.
See labels on email in your inbox to quickly identify different types of email.
Create a label:
You can even create nested labels, which are like subfolders.
Tag one or more messages with a label you’ve created:
Add a color to a label: