C struct initialization using labels. It works, but how?

Here is the section of the gcc manual which explains the syntax of designated initializers for both structs and arrays:

In a structure initializer, specify the name of a field to initialize with '.fieldname =' before the element value. For example, given the following structure,

 struct point { int x, y; };

the following initialization

 struct point p = { .y = yvalue, .x = xvalue }; 

is equivalent to

 struct point p = { xvalue, yvalue }; 

Another syntax which has the same meaning, obsolete since GCC 2.5, is 'fieldname:', as shown here:

 struct point p = { y: yvalue, x: xvalue };

The relevant page can be found here.

Your compiler should have similar documentation.

These are neither labels nor bitfields.

This is a syntax to initialize struct members dating back to the days before C99. It is not standardized but available in e.g. gcc.

typedef struct { int y; int x; } POINT;
POINT p = { x: 1, y: 17 };

In C99, syntax for initializing specific struct members has been introduced for the first time in a standard, but it looks a little differently:

typedef struct { int y; int x; } POINT;
POINT p = { .x = 1, .y = 17 };