How do sensitivity labels work in Microsoft 365?

When you apply a sensitivity label, you classify data and enable proactive protection settings and actions.

Sensitivity labels operate at two levels:

Workspace / container level:

• Controls internal and external access to Teams, SharePoint sites, and M365 Groups.
  
• Configures privacy settings and external sharing rules.
  
• Applies Conditional Access settings, such as blocking access from unmanaged devices.
  
• Defines whether private teams are discoverable in search results.

Files / meetings / emails level:

• Applies encryption and content markings.
  
• Restricts access to authorized users.
  
• Enables custom headers, footers, and watermarks.
  
• Auto-labels files and emails based on specified conditions.
  
• Protects meetings and chats by enforcing label-based security.