First of all, labels imply difference. Only once the base line has been established can labels be created based on deviations from the normal. The normal does not need a label because it is the accepted good. So then why labels if they emphasize our differences? True equality comes from being able to become a part of the norm, so must labels be shed to destroy the differences and find acceptance?
We need pride, though. We need unity. We need a voice, and we find that when we come together. Without labels, without an awareness of our differences, there is nothing which can bring us together.
Lesbian, bisexual, and gay cover the basics of differing sexuality, but many other people consider themselves to be label-free or sexually fluid. It has been proven that women have an ever-changing sexuality and in general are attracted more to a person instead of a gender (Read Lisa Diamond's Sexual Fluidity if you would like to know more on her research. Trust me, it isn't boring.), leading to the creation of the term sexually fluid. Labels are diverse, with different words trying to encompass different facets of a concept. Although there are many different labels, not everyone can fit into one perfectly, and many are unsure if they even want to be put into those boxes. And then within these bigger boxes, there exist smaller ones.
What about the labels within the labels though like butch, femme, and bear? As a community, we have created them ourselves to find closer categories in which to place ourselves or from which to find our partners. Such as I know I am generally considered butch, and I am generally attracted to femmes.
Even though labels tend to put us into little boxes, sometimes we need those boxes to be able to find and define ourselves. I know I needed to be able to define myself as a lesbian when I was in high school. I needed to be able to say this is who I am.
I feel that same need now, to be able to find a different label for myself in the spectrum of gender. Not for anyone else's benefit, not to emphasize my differences, just to be able to define myself in my own head. It is in our natures to define things. Words are created to explain concepts in our world. So there are good and bad sides to labels. In the end, we make our own choices, and labeled or not, we are our own people, individuals outside those categories.