Besides the visual benefits of having certain files tagged with a Color label, there’s a hidden benefit: You can search for files by their color. For example, let’s say you misplaced an important file for a project you were working on. You can press Command-F to bring up the Find function, and from the top-left pop-up menu, choose Color Label.
Then, click on the color for the files you labeled in that project, and it will instantly find and display all the files with that color. Searching by color—only Apple is cool enough to come up with a search like this!