When those labels aren't informative or accurate at all, it ends up becoming a chain rather than liberation. "Oh Im MBTI-4acronym, according to that personality test, I'm an introvert so I should skip this public event!".
We are inherently complex and multi-label, even with the worst simplifications. That's confusing and frightening to many, so we seek an "oracle", authority, that can tell us who we are. Problem arise when those are false prophecies.
And they are almost always false. (to varying degrees) Social media mental diagnosis is exactly the same. And crucially they're very wrong over time [1]. So it end up as a shackle to stunt their growth. It completely stops the trail&error process, exposure, and creates a self reinforcing cycle so the label becomes deeply rooted as an identity. There's really no substitute for "trying out yourself to see what works for you, and make sure your trials are set up so you can learn something from it" when it comes to self discovery.
I wish psychology was a bit more scrutinized field. The amount of popscience garbage they give out, and how many people use these model to judge and limit themselves in their life is so sad to see. Probably one of the primary reasons I would keep social media far away from kids (if I had any).
[1] https://www.psychologytoday.com/us/blog/give-and-take/201309...