Labels can be used on files, tasks and calendar events. Over time it's not unusual for a number of labels to become redundant.
The easiest way for Workspace Owners to manage these centrally is by navigating to their workspace's Options>Settings and click the 'Manage labels' button.
Select each label's checkbox to see if it's currently in use. In the example above the label that's been selected is attached to 3 files. If after selecting a label the counter remains at zero, it is unused and can be safely deleted without affecting your label structure.
To rename or change the colour of a label, hover over the name and click the pencil icon.