Label Designer
From PinataIsland.info, the Viva Piñata wiki
The Label Designer is used to customize a pinata's unique label.
Your designed label will not appear on a pinata that you attracted from the wild. You will have to breed it or evolve it to have your own design replace the blank tag.
Your tag will stay on a Pinata if you mail it to a friend via Xbox Live. So you can have your Pinata travel the world so that your friends can see the custom tag that you created.
A label consists of a border, a background, and a logo. Each of those three areas has many different color and pattern combinations to choose from making for millions of unique combinations.