In order to understand wine labels, it is important to understand the concept of "Appellations of Origin" for wines. This subject will be filled with contradictions and exceptions, but we will try to make it as simple, and clear as possible.
At their most basic, wine labels are nothing more than a simple "brand name" for a product. They should tell you what is inside, where it is from and who made it. Additional information may include such things as the year it was harvested (the vintage date), the blend of grape varieties from which the wine was made, its particular quality level, and other such information.
In most modern wine producing countries, there is a fairly complex system of appellation controls. This means that if a wine says it comes from a specific area, there are certain legal standards that must be met. In general, the more of these standards that a wine meets, the higher its quality will be. France has served as the model for these regulations. Their system, called Appellation d'Origine Controlée (AOC), uses a hierarchy based on geography and allowable grape varieties. Most other areas follow these basic guidelines, but none are as fully developed as those of France are, with the possible exception of Germany (and those regulations could use some definite streamlining.
It is useful to think of AOC's as a sort of set of concentric circles, with the smallest circle on the inside being the most prestigious and most highly regulated.
As an example, we will use Château Latour, one of the most highly regarded wine properties in the world. Château Latour's vineyards would represent the inner circle. Any wine released by Château Latour under its own name would have to come solely from its own estate vineyards. "Pauillac" would represent the next circle. (The AOC for Château Latour is Pauillac.) Pauillac is a subdivision of the Haut-Médoc; Haut-Médoc would represent the next circle. The next circle would be called Bordeaux, an AOC that includes Haut-Médoc. The last, outer circle would be called Vin du Table (Table Wine) de France. Wines labeled as Château Latour must come from grapes grown on that property. Wines called Pauillac must come from somewhere within the Pauillac district; wines called Haut-Médoc must come from somewhere within that district; wines called Bordeaux must come from within the Bordeaux district and wines called Vin du Table can come from anywhere in France. It is accepted that the more specific the area, the higher the quality of the wine.
Only part of the qualification for AOC is satisfied by geography. We then have to layer in grapes and yields. By law, only certain recognized grapes may be grown within an appellation. A further requirement is that only so many tons per acre may be harvested during a given vintage year. These harvested grapes must achieve a minimum level of ethanol (beverage alcohol) upon fermentation. In some countries, such as Italy and the United States, minimum percentages of grape varieties blended into a stated wine type or grape variety are regulated. In Italy, certain wines such as Chianti Classico must have a minimum quantity of Sangiovese and some white wine grapes. In California, if a variety is stated on the label, such as Cabernet Sauvignon, it must be at least 75% Cabernet Sauvignon. Beyond these types of regulations, there isn't a great deal that governments can do to help guarantee quality.