A label template essentially acts like a mini-report template that you associate with a specific command (or commands) in the report. This gives you a lot of freedom with data that you can include in your report. For example you can display labels for dimensions, labels for measured features, for auto features, and so forth.
Example label housing a Position table with a Feature Control Frame (FCF)
PC-DMIS ships with several standard labels that you can associate with objects in your Report templates. However, as with Report templates, you can create your own label templates as well. Label templates can contain any object from the Label Template Editor's Object Bar, but they usually contain the GridControlObject or the Graph object.
The Label Template Editor is used to create label templates.
More:
Understanding the Label Template Editor
Tutorial - Creating Label Templates