Bottom line: They’re all useful. And like anything useful, they can be misused.
Over at Thoughts on Fantasy, Nicola Alter argues for the necessity of literary labels:
As a reader, I love genre. I love that there are labels in the different parts of the book store, or labels on Goodreads, that help me find the kind of story I’m looking for.
As a writer, I love genre, because it allows me to convey the kind of story I am writing with a few simple words. I love to think about stories I could write that use elements of different genres, or that subvert or fulfill genre expectations in interesting ways.
Alter also weighs in on the debate she calls “The Myth of Genre Fiction vs Literary Fiction.” It’s true they are distinct categories, but they are not castes. One is not superior to the other. There are good and bad examples of each. Plot and characterization are vital in both.
I can relate. I’ll get an occasional raised eyebrow for considering both Hemingway and Howard as mentors. But I learned a great deal from reading Hemingway and Howard. Both authors crafted great stories that still crackle with energy.
That said, another label that generates more heat than light among readers and writers involves region. Dannye Romine Powell dismisses regional labels as restrictive, even dismissive. But I tend to side with Hailey Foglio on this:
Lately, I’ve been thinking about the identity of writers and how we define ourselves. Writers label themselves based on location, genre, themes, etc. Personally, I refer to myself as a Young Adult writer because that’s what I love and that’s what I do. A couple weeks ago, we had a wonderful writer visit us at WVU named George Singleton. George is from South Carolina, and during his visit, George told us that he had been invited to an Appalachian writing conference. But he distinctly argued, “I don’t consider myself an Appalachian writer; I’m a Southern writer.”
I consider myself a Southern writer primarily writing fantasy fiction, and I see nothing incongruous in adapting the wild and fantastic to traditional themes. The best apologist for this approach was Flannery O’Connor, who famously said, “You have to make your vision apparent by shock — to the hard of hearing you shout, and for the almost blind you draw large and startling figures.”
Works for me.
M.C. Tuggle, Writer 
Interesting to think about regional labels, those add another dimension to genre/writer labelling. I haven’t read any Southern Gothic yet but I understand it’s not just about setting but also style? And I’m guessing a Southern writer is describing not just where they live or set their books, but also the style of their writing? I describe myself as an Australian writer but I don’t think its a label that necessarily says much about my writing (I haven’t written anything set in Australia or that I’d say has a recognisable local flavour)… Though in other non-fantasy genres, such as literary fiction or rural/outback romance, I’d say the ‘australian’ label does refer to certain tropes/styles.
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Nicola Alter,
Southern lit is defined not just by its Southern origins and/or settings, but also by recurring themes of history, family, and faith. Unlike the triumphalism and progressivism of Northern writers, Southern writers tend toward a more accepting attitude toward life as it is. Richard Weaver, writing in The Southern Tradition At Bay, said this:
“But nature is not an opponent, as ancient systems of belief could have instructed us; it is the matrix of our being, and as such scientists we are parricides. Piety is a realization that beyond a certain point victories over nature are pyrrhic.”
And Southern gothic riffs off those themes and tilts toward the bizarre, the disturbing, and even the supernatural. If you haven’t read any Southern gothic, you’re in for a treat. Check out Flannery O’Connor’s A Good Man Is Hard to Find. You’ll be glad you did.
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