Labeling a graph involves identifying and annotating various elements to enhance its readability and understanding. This includes adding data labels to display specific data points, axis labels to identify the values or categories represented on the axes, and legend labels to provide information about different data series or categories. Labels should be clear, consistent, and appropriately positioned using effective text, font, color, and size. They play a crucial role in interpreting graph data by providing context and aiding in the analysis and communication of insights.