Office 365 Sensitivity Labels have come a long way since their introduction in 2018. The latest GUI refresh emphasizes the scoping of labels into those that deal with files and messages and those applied to containers (sites, groups, and teams). Scoping makes it easier to manage labels. You might have some labels which crossover between the two scopes, but in most cases you'll find it best to restrict a label to a single scope.
https://petri.com/scoping-sensitivity-labels
