The primary difference between the old labels and the new tags is that you can put multiple tags on the same file. So a file can exist in multiple tag lists.
For example, if you were tagging your pictures, you do not need to decide if the picture if "Family" vs "Vacation". It can be both, as well as "Spouse", "Child", "Wild Life", etc... if the picture contained all those elements in the shot.
Or if you tag your ebooks, you can have "Biography", "Read", "Great", or "Fantasy", "Unread", etc...
Then using the Finder, you can open a Smart Folder of just a select tags.