Nested Labels in GMail

New in Labs: Nested Labels and Message Sneak Peek - Official Gmail Blog:
Thursday, April 08, 2010 | 5:27 PM

Labels are more flexible than folders because a given email can have several labels but can't be in several folders at the same time. A highly requested feature for labels, though, comes from the world of folders: the ability to organize labels hierarchically.

If you think this might be useful to you, go to the Gmail Labs tab under Settings, look for 'Nested Labels,' enable it and click 'Save.' You'll then need to name your label with slashes (/) to make it the child of another. For example, let's say you wanted to create a simple hierarchy with a 'Home' label, and inside it a 'Family' and a 'Vacation' label. Just create three labels with the following names:

Home
Home/Family
Home/Vacation

You can then create 'Home/Family/Kids,' 'Home/Pets,' etc., to get something like the screenshot on the left. If you had the parent label 'Home' before you don't have to create it from scratch.

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Note:

1. Labels need to be created one by one from parent to child.  For example above: it is to create "Home" and then "Home/Family": i.e., cannot create "Home/Family" directly without having "Home" before, otherwise we'll get non-hierchical "Home/Family" as a single label.
2. The label "/" is not effected (so far).