A micro-label is an identity that fall under an umbrella of a larger identity and cannot stand on its own. For example an apothisexual is someone who is asexual and sex repulsed. If someone says they are apothisexual it is also implied that they are asexual because apothisexual is a modifier making it a specific sub category of asexuals. Micro-labels are most often used to describe more specific feelings, and to create a sense of community for people who also experience those feelings.
Unlike what some people believe, the term micro-label has nothing to do with how popular or well known the identity in question is. There can be uncommon terms that are not micro-labels, because they can stand on their own and do not modify an existing identity. There can also be micro-labels that are well known and popular, but they are still micro-labels because they are a sub-category of an existing identity.