The sequence of steps is:
A layout is where you define what will print on the label. For example for a spine label you may choose the Classification Number.
A layout template is the dimensions of the sheet you are using. You will need to either acquire the dimensions from the label supplier, or measure them accurately.
Layout Templates will need to be defined for each type of Label sheet or page you wish to print to.
A label batch is where you take your Layout, Layout Template and merge with the items you wish to create the labels for.
Once the merge has been completed, a PDF will be generated that can be used to print the labels.