I hand write my labels on white fabric with a super fine point permanent marking pen. . I start with a 4.5 inch square folded on the diagonal. I have a 3X5 card that I insert into the folded square/triangle. I darkened the lines on the 3x5 and marked a line to indicate the center. I write what I want on my label on paper, decide how I want it on the label and write it on the triangle using he lines on the card that show through the fabric as my guide. I then sew the label into the seam allowance of a corner and hand stitch only the folded side of the triangle. Yes, I leave the triangle double. I hides any shadows of the print of the backing fabric. Rarely I will write directly on the backing of the quilt, but not often. Bind and done. Works for me and I can keep the label small.
I have a friend that uses her embroidery machine to make lovely labels but for me they are too large. I am not familiar with how small you can make font with a embroidery machine and have it still be readable.