The inbox view currently displays the top-most label in the hierarchy of labels if an email chain has more than one label. It should display the label assigned to the most recent email, the one actually displayed in the inbox view. The one relevant to the email entry right next to it. For example the most recently received email has a label L but previously there was a label A assigned to one of the past emails from the same sender. Label A is displayed incorrectly where a more recent and more accurate label L should be showing. Label A is not relevant to the email at hand at all.

Practical example:
Use-case example:
I have different custom domains, each has a different label. Receiving email from the same sender groups the email into one chain. If the same sender sent an email to more of my domains, they get different labels correctly, however they do not display correctly. The top most label is displayed with a (+more labels) next to it - not the most recent email's label.