This is a technique of repeatedly "naming" or "labelling" with the purpose of directing the attention to the mind/body phenomena in order to understand their true nature correctly.
The guiding principle in Vipassana practice is to observe whatever arises at the moment of its occurrence—by noting the present, one lives in the present.
Note attentively and precisely. Superficial noting may make the mind more distracted. When the concentration is weak, the tendency to skip over things may be checked by using the device of "labelling". The actual saying of the words that constitute the "label" is not really necessary, but it is helpful in the beginning. Do persist with the labelling until the noting becomes fluent and drop it only if it becomes too cumbersome, then it has outlived its usefulness.
The meditator will get an appreciation of the purpose of Vipassana meditation by bringing an investigative quality to the "noting practice". This exploration can lead to the discovery of the true nature of the mind/body process.