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If you

  • set up a filter

    Matches: from:(foo@gmail.com)
    Do this: Skip Inbox
    
  • read a mail from that person
  • apply label
  • receive a reply

The label will not show a count for that reply or any other replys from that conversation, notice it says Foo instead of Foo (1)

label

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The count is the number of unread messages, your filter told Gmail to mark it as read. –  mhoran_psprep Jan 26 at 12:59
    
@mhoran_psprep archiving is not the same as reading. –  Steven Penny Jan 26 at 14:12
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