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Can label types be sorted alphabetically in Plain?

No. There is no button to sort label types alphabetically. You set the order yourself by dragging each label type into position in Settings, under Labels.

The order you set applies across the whole workspace: in the thread label picker, in filters and in the sidebar. It is saved and shared with every user in the workspace.

Nested labels

Plain supports up to three levels of nested labels. When a label is applied to a thread, all of its parent labels are applied automatically. You can also drag nested label types to reorder them within their parent group.