Labeling theory suggests that:

Labeling theory posits that the way we categorize and label individuals or groups significantly influences their identities and behaviors. This perspective, rooted in symbolic interactionism, emphasizes that labels are not merely descriptors; they carry meaning and implications that can shape how individuals are perceived and treated by society. For instance, labeling someone as a "criminal" can lead to stigmatization that affects their opportunities and interactions, reinforcing negative behaviors or social exclusion.

In contrast, the other options suggest that labels lack significance or consequence, which overlooks the core idea of labeling theory. Neutrality of labels ignores their social implications, while considering labels irrelevant denies the profound impact they can have on social behavior. Lastly, confining the significance of labels to legal contexts restricts their relevance, as labels operate in various aspects of society, from education to personal relationships. Thus, the understanding that labeling significantly influences perceptions and societal responses makes the chosen answer the most accurate reflection of labeling theory.