Custom Post Types — $args vs. labels array

The code you posted is an incomplete copy/paste of the code from the tutorial you linked. labels is a parameter within the $args array:

$labels_array = array(
    'name' => _x('Books', 'post type general name')
);

$args = array(
    'labels' => $labels_array
);

register_post_type( 'book', $args );

$args is an array that contains an array of label parameters.