In the backend, there’s no difference between labels and mailboxes. This switch is purely a boolean that instructs the the webmail client which set of behaviours to use.
Your colours will remain intact if you switch between the two. Mailboxes can have colours too.
>Switching back to Folders mode: ... Your labels will be converted into Folders.
Upon converting back to Folder mode, what happens to our painstakingly entered per-label color assignments?
As a Fastmail user, this worries me, as on its face suggesting a destructive bulk state change to all metadata of the account.