Labels can be inclusive -- "Oh, you're an X, so you're one of us" -- or exclusive "So, you're a Y, we don't like them round here".
Every community needs some kind of label so they know who they are and how they differ from those who are not. I am a resident of a particular suburb, have a particular gender, have a particular taste for one sex or the other (or both), like certain things done to me in bed, etc. Using these labels is normal and essential. It's how we define ourselves.
Some communities use labels in order to justify themselves, while others like to use a different label to exclude them. "You're gay, you're one of us." vs "You're homosexual, you need help." It is not that a community decides on a label, it is the label that creates the community.
And, for a while, finding a community who seems to be like you gives you the sense of self-worth and power that you need to say: "I'm normal really, since there are others like me." But then it all starts to unravel, as the community cannot offer everything you need. Finding the gay community did not stop homophobia or the nagging doubts about whether or not liking the same sex is really okay in the eyes of God.
But the community was once good, it seemed to be what you needed, so there must be something wrong with this particular community. Are we letting in the wrong people? Well, I don't like the Z's, so I now define my community to exclude them. And now I have a tighter definition of what it means to be 'one of us', I'm going to make sure that everyone else abides by my standards. Then perhaps I'll feel good about myself again.
Bah! While it seems divisive (because it is) and unpleasant (because it is), I have a horrible feeling that it's human nature to do this. Almost every community ends up doing it, by labelling, relabelling, excluding, enforcing norms, etc.
Bah again!