as a side note - I found that in Configure Module (project associated with a sandbox org, not an SFDX project),
* if I only checked CustomLabel (all) , IC2 does not build a folder in src
* if I checked both Custom Label and CustomLabels, IC2 build a folder called labels under src with the single file: CustomLabels.label
Thus, you would be editing the entire file containing all custom labels to add/change a single custom label