I have tried a couple of forms of labeling, and here are a few things I notice:
Labeling things at a quite conventional level – car, woman, man, tree, ground, sensation, thought – can be quite helpful. It helps release attention out of more elaborate, and often stressful, stories. It keeps things simple. I get a sense of how it is to be and live without being caught up in stressful stories. And after a while, if I do it regularly in daily life, it becomes a new habit. The old groove of getting caught up in elaborate stories starts eroding and fill in, and this new groove of simple stories and labels grows deeper.
Labeling at an even more basic level – for instance sight, sound, smell, taste, sensation, thought – has a similar effect, and also a different one. It releases attention out of more elaborate stories. It brings attention to the most basic labels, rather than the more elaborate ones (sensation instead of, for instance, “pain”). And when I include what I tend to take as me and I in this labeling exploration, what has been habitually taken as the subject is shown as an object (the me and I is revealed as sensation + image/thought).
The first version of labeling is more accessible, especially in the beginning and when I am out and about. The second takes it a step further, and I find I tend to use it more when I can bring more of my attention to it.