Show Finder labels
To display the coloured labels for dock items, check this box.
You can set the label for a dock item from the item's contextual menu or the File menu.
Draw Finder label colours on icons
To display the label colour as part of the icon, check this box.
Draw icons in black and white
To display the icons in grayscale, check this box.
This is useful for graphic designers, who do not want strongly coloured icons to interfere with their work.