I logged into my Google Apps Gmail this morning and was greeted with this — an announcement of some new features:

I really like this approach — summarising the new features in a lightweight overlay with two clear headings: one announcing the new drag and drop functionality relating to labels and messages, and the second answering the question, “where did all my labels go?”. If you’re left in any doubt, the two diagrams nicely sum things up. There’s some clear calls to action in there too — the “Ok” dismisses the overlay and the “Manage labels link” allows you to decide for yourself which labels you want to appear on the left.
The functionality itself is quite interesting — it’s the closest Gmail has come so far to emulating the traditional folder set up found in many email clients. If you drag a message, it gets assigned a label and automatically archived, so it doesn’t appear in the main inbox. Gmail’s lack of folders has never personally bothered me; in fact I tend to find that using folders is quite often a short-cut to losing mail. Still, it’s quite useful when it comes to things like mailing lists which can quickly overwhelm your inbox.
A valid drop target is indicated via the label name becoming highlighted in inverse, e.g. white text on a blue background which is pretty intuitive. The tool-tip, “Move x conversation[s]” also changes colour to match. It’s less obvious when you choose an invalid target — in fact you get no feedback other than nothing apparent happening:

A valid drop target in Gmail.

An invalid drop target