This facility enables you to set up a maximum of 5 "custom labels" for groups of products so that you can more easily manage them as separate campaigns within Adwords PLA's.
When adding or editing a product, set up an attribute for the "custom label" you want the product to fit into and give it the name that will then appear in the product feed and show in Google's Adwords campaigns for PLA's
For example, if you wanted to group products together that were under £100, you would set up the following attribute for each of them:
Attribute: custom group 0
Value: under 100
Hidden: ticked (so it doesn't display on the webpage)
You can set up 5 groups in this way, called:
custom group 0
custom group 1
custom group 2
custom group 3
custom group 4
Read more on Google's Custom Label Attributes For Shopping data guide