A label is a group you can create. You can edit labels to your liking, add a lable picture that shows up if you get called by a contact with a label, or even a ringtone. It is easier to differ between work and family calls before you even picked up the device to take a look.

Android 9
Step 1:  Open  Contacts
Step 2:  Open the  menu
Step 3:  Tap on  Create label
Step 4:  Type in a Label name and confirm with  OK
  1. Open Contacts
  2. Open the menu
  3. Tap on Create label
  4. Type in a Label name and confirm with OK

Android Instructions
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