If I label the $/Trunk folder, will that label affect (count for) everything under Trunk, or the label is only affect for Trunk folder?
All files and folders under $/Trunk will have the label.
If you label $/Trunk with "MyLabel", and you do a "Show Labels" on $/Trunk/Subfolder/FileA.txt, then "MyLabel" will be seen as an inherited label on FileA.txt. The label was inherited from $/Trunk.
However if you explicitly label FileA.txt with "MyFileLabel, and Show Labels on $/Trunk, then "MyFileLabel" will show up as a recursive label.
So to summarize:
-- An explicit label is one that is applied directly on a file or folder.
-- An inherited label is a label that was applied at a level above the sub folder or file you are using the "Show Labels" command on.
--A recursive label is a label applied to a file or folder under the folder that you are doing the "Show labels" command on.
