Custom labels are used to store constants in Salesforce organizations that can be configured by admins. They are completely configurable, and also allow for translation. If you are building a Lightning component to support multiple languages, all of the hardcoded titles need to be inside of labels, so that the platform automatically takes care of displaying the right label, as per the user settings (user-specified language).

The labels in a Salesforce instance can be created by navigating to Setup | User Interface | Custom Labels and then clicking on the New button. The following screenshot shows how to create a custom label in Salesforce:

To reference this in a Lightning component, the syntax is as follows:

$Label.c.LabelName

So, for a label named Pickone, the component markup can reference it by using $Label.c.Pickone.

In a JavaScript controller, you can get its value by using the following syntax:

$A.get("$Label.namespace.labelName")