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We know that one hot encoding increasing the dimensionality of a data set. But, label encoding doesn’t. How ?
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Using one hot encoding, the number of  features in a data set increases because it creates a new variable for each level present in categorical variables. For example: let’s say we have a variable ‘color’. The variable has 3 levels namely Red, Blue and Green. One hot encoding ‘color’ variable will generate three new variables as Color.RedColor.Blue and Color.Green containing 0 and 1 value.

In label encoding, the levels of a categorical variables gets encoded as 0 and 1, so no new variable is created. Label encoding is majorly used for binary variables.

by Wooden (3,101 points)

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