when restricting content for a label using the open eye condition (contents should not be show, but the content areas existence should be visible, greyed out, and showing required conditions), the label contents are still visible and not greyed out. The condition to show is listed however.

the text description for this does not imply it won't work for this content type.

https://docs.moodle.org/404/en/Restrict_access_settings
"If the eye is OPEN the students who do not meet that part of the condition will see the activity but it will be greyed out and have information about why they can't access it yet."

When setting the eyeball to close the label does not appear, as I would expect.

I suspect this is a restriction of the content type, but either it's a bug or might need an amendment to the documentation, either to the restrict access docs or the label docs.