Gmail’s labels feature has got some changes. Now, labels are displayed on the left of Gmail inbox, just above your chat list. With this the right-side labels, an experimental Gmail Labs feature, retires. Other improvements include ability to drag and drop messages into labels or labels onto messages and label showing or hiding. The changes are expected to help Gmail users organize their emails more efficiently.

1. New location for labels:

Labels now appear in a new location on the left of your inbox (or on the right, for those of you using the Arabic, Hebrew, or Urdu versions of Gmail). Labels are now shown above your chat list, grouped together with Inbox, Drafts, Chats and other system labels. So, no new sections for labels.

2. Label hiding and showing:

Gmail will now automatically show the labels you use most and hide the rest. It will save you from having to look through labels that you rarely use. When you want to view your old label, just click the “more” link.

3. Drag and drop labels:

To organize you emails, now you can now drag messages into labels. This is the simplest way to label and archive your emails. You can also drag labels onto messages.

via: Gmail Blog