mistersquid, S. G. is actually referring to the new Tags feature in Mavericks. This replaces entirely the Labels feature in previous versions of the OS, as far as I can tell.
Labels would let you apply a color highlight to a folder. It would appear as a color behind the entire row.
With Mavericks, however, Labels are gone and are replaced with Tags, which just puts a small colored dot off to the right of the folder name (and it's always like this, not just when you click on the folder), and some of these aren't distinct enough from one another (i.e. purple and gray look almost identical if you're scrolling through a series of "gray" folders pretty quickly—you may miss that one purple dot). Also, like S. G. mentioned, these can be pretty far off in your periphery if you've got long folder names, so this just adds another level of "hard-to-see-ness" (it's a technical term 😝 ).
I'm a graphic designer and I have been using Labels to colorize my job folders according to their current status. For example:
No label = job is open/in progress.
The next color schemes were more of a "stop light" effect, going from red to green:
Red = job is approved. Prep final files and send to printer/client.
Yellow = job is done. Prepare job ticket/calculate time for billing.
Green = job is done and job ticket is ready to go (hence the green color) to my co-worker for billing/invoicing.
Gray = job is finished/billed/closed (i.e., I've "grayed it out").
Purple = job transferred to another co-worker (i.e., I got too busy and they're working on it now). This one is a rarer color, and with Tags it's a bit difficult to discern one or two purple (more like a light lavender) dots in a sea of gray ones.
I agree with S. G. and would love to see a stronger means of identifying the status of a project at a glance reappear—perhaps as a selectable alternative to Tags in the Finder preferences (because I can definitely see how the two means of colorizing a folder could compete with one another), like a checkbox to the effect of "Use Labels instead of Tags," similar to the "Open folders in tabs instead of new windows" option.
Feedback submitted. Thanks, yodathejedi, for the link. 🙂
Message was edited by: Xiebinrui -- oops, duplicated word. Fixed!