Gmail on 9900 - Labeling issues

I have been having trouble with labeling and figuring out the dynamics of it with this new OS. Wasnt able to do it at all on my 9700 so I want to learn. Tried searching the forums and reading kevins blog but wasnt lucky.

I select an email and choose apply labels and then choose a label right? Is that it? Does the gmail server version go in there too? Do I have to save it before I label so that I dont lose it? Or is it all happening on the phone and not on the gmail server at all. I seem to be confused because I will label something only to find it gone later.