This coule easily be abused, however, it strikes me as a good balance between speech & reach [1]
If you are nobody, you don't really need to worry about a label. But if you are a politician with some agenda, you can't take those labels off you. If you have a broad reach, you must bare those labels everyone put upon you, this imitates IRL social pressure to an online virtual world.
I wonder if labels could be reversed, see who labeled me, and dispute wrong labels? The "reach" is an unexpolored setup in social networks.
[1]: https://atproto.com/guides/overview#speech-reach-and-moderat...