Gmail Labels/Folders FAQ
Q: What are labels? How are they different from folders?
A: Labels are functionally very similar to folders. Gmail uses the Archive function to move emails out of the Inbox to the All Mail folder. Once an email has had a label applied to it and has been archived, the label essentially functions as a folder, which can be accessed from the left side of your Gmail home screen. You can organize labels in the same way that you can organize folders; by reorganizing them and nesting them within each other.
Labels can also be applied to email messages while still in the Inbox, in which case, they will simply serve to "tag" the email, until the email is archived.
An advantage to labels is that multiple labels can be applied to email messages, which can be a useful organizational tool, and searching within labels allows for more efficient searching than searching the entire Inbox.
Q: Will all of my folders be the same when they're migrated into Gmail?
A: Your folders will be imported into Gmail as labels, and as long as each folder has at least one email in it, then the folder structure will be retained exactly how it was in your previous email client.
For example, take the following folder structure in an email client such as Outlook or Thunderbird:
Assuming each of these folders has at least one email in it, the folder structure will be re-created in labels like so:
If, however, the "TopFolderExample" did not have an email in it, the folder structure would still be replicated, but would be flat, like so:
Folders with no emails in them will not be migrated, regardless of being a subfolder or top-level folder.