From this window you can choose from many different label layouts. You can design your own or change the existing ones. Most are equivalent to the popular Avery labels, and are listed by Avery label ID numbers. You can select any layout, or even add your own. Add, Clone and Edit bring up the Label Definition window where you can set the number of columns of labels, number of rows of labels, and the actual inch dimensions of the labels.
You can also set the font to use. The first line of each label can be different from the rest of the label text, so addressee's names can be bigger or bolder than the address.