The order names appear in for a list's mail labels is determined by the Order By filter as well as the User Base selected in the Output Options tab.
For example, in this list, the results are sorted in ascending order by last name and then by first name of the record identified in User Base.
In the Output Options tab, User Base.User ID is selected for Mail Labels.
In this list, User Base is the student.
Now, when you click the Mail Labels link
and generate labels, using the Individual Informal or Individual Formal salutations, the student names appear in ascending alphabetical order by last name. (For example, John Adams will appear before Alexis Smith.)
If you generate labels using the Address Informal, Address Formal, or Address Household, the names of the parents also appear in the order their student names appear when the Individual Informal or Individual Formal salutations are selected. So if student John Adams appears first in the Individual salutations, then his parents Alisa and Joseph Adams also appear first when the mail labels are generated.