Explanation
Graphical user interface, text, application, email Description automatically generated

Reference:
https://docs.microsoft.com/en-us/microsoft-365/enterprise/about-microsoft-365-identity?view=o365-worldwide

Reference:
https://docs.microsoft.com/en-us/microsoft-365/compliance/get-started-with-sensitivity-labels?view=o365-worldwide

Explanation
Graphical user interface, text, application Description automatically generated

Box 1: Yes
You can use sensitivity labels to provide protection settings that include encryption of emails and documents to prevent unauthorized people from accessing this data.
Box 2: Yes
You can use sensitivity labels to mark the content when you use Office apps, by adding watermarks, headers, or footers to documents that have the label applied.
Box 3: NO
https://docs.microsoft.com/en-us/information-protection/deploy-use/configure-policy-markings