Sensitivity labels allow Office 365 tenants to encrypt messages and documents very easily. That is, as long as you have applications that understand labels. A preview version of the AIP client integrates a Sensitivity button in the Office desktop applications, but we must wait for native integration across desktop, web, and mobile clients.
The functionality around Sensitivity Labels looks good! But the separation into Sentitivity and Retention has given me a problem. The Labels I had defined (before the separation) and attached a DLP -policies to, have now suddenly become "Retention" labels. And that is not what I wanted to use them for. They were intended for sentivity purposes. And since these labels have been used for a year, I cannot change them or delete them, because they are used on thousands of documents.
Well, you can search for all the documents to which you have applied retention labels to and remove them (search for compliancetag not blank), but you can't replace them with sensitivity labels just yet (at least, I haven't found a way). But we're only starting with sensitivity labels and I wouldn't do anything just yet until we a) see how they are integrated into SharePoint (what metadata is used) and b) how they are integrated into the Office Online apps and the SharePoint/OneDrive browser apps. Remember that a document can have a sensitivity label and a retention label, so maybe you'd leave the retention labels in place and work out how to use the sensitivity labels most effectively in your organization when they are fully baked.