Unwind Direction (sometimes also called Wind Direction) refers to the orientation of the labels as they come off of the roll (i.e. as you unwind the roll of labels). The label industry has developed standard descriptions for the various unwind directions to avoid any confusion. For example, Unwind Direction #1 (Top Off First) indicates that the top of the label will be the leading edge when the roll is unwound. Unwind directions are often not very important if the intention is to hand-apply the labels to your products, but they become critical if your labels are applied by machine - so the products and the labels are aligned correctly.
Here's an image demonstrating the most common unwind directions (just click the image for a larger view):