I've actually worked with 100+ companies that use labels heavily. It's way more common when you have multiple engineering teams and nobody everybody knows all projects in a cluster. Also, it's common to start with namespace labels which are generally easier to manage.
It sounds great in theory ("lemme query all my pods in staging", "lemme find secrets by the marketing team") but it's just not used for some reason. I think people like flat organization (e.g. "find deployment X") more than searching by labels.