Quote - I don't really understand why labels are important.

They are not important to me when speaking of a person except to understand their motivation, as I defined them (for myself) above.

Quote - Is there an implied difference in skill? Does one confer more prestige than the other? Does the need to have one label for oneself and to apply another label to someone else stem from insecurity, or is it boastful, or does it serve some other social purpose?

The answer to that would be "yes."  Apply as needed. :)

Quote - Mostly, in CGI forums (this one included), I see "hobbyist" and "amateur" used in a less than positive way as a way to distinguish those who "know what they're talking about" from those who load, click, and render NVIATWAS.

This is the problem: defining the person and the work with the same label.  A hobbyist who creates wonderful items but has no intention of making a living off of the work is, to me, a skilled (quality) hobbyist (motivation).  Someome who tries to make money by way of "quantity over quality" is, to me, an unskilled (quality) pro (motivation).

Are these terms important?  Only in as far as language is important to express concepts.  If I never posted or read about these things, I would never need internal terms for them.