I want to know if I can have gmail auto create label based off the sender. For example if I receive an email from email@example.com I want gmail to to apply the filter sarah without me manually creating the label because I want every single email to be labeled in this nature. Is this possible?
Currently Gmail doesn't support auto label creation as it doesn't know what to look for. It only filters emails automatically based on manually created labels. It needs some help to understand what you want to do. If you want Gmail to auto label e-mails from firstname.lastname@example.org, you need to tell it at least once to watch for and label all emails from email@example.com, and gmail will take care of the rest. An auto label Gmail function would completely mess up your e-mail labels unless programmed correctly to look for specific parameters.
P.S. I use their label feature a lot. Maybe a little too much. My inbox is quite colorful.