A netlabel is basically a makeshift music label run from someone's home over the Internet. It is often run by teenagers (though not always). Quite a few netlabels are completely non-profit and upload their entire catalogs to websites like archive.org. Most netlabels seem to specialize in noise, shitcore, 8-bit, and lo-fi experimental stuff, but some branch out further than these or even eschew them altogether. People who run netlabels often collaborate with one another on projects (including, but not limited to, splits, comps, and mashups). Very few of the artists on these labels gain any local recognition (exceptions do exist), and quite a few do "gigs" in places like bedrooms and at house parties.
Pha-Q Phonographs, Snuggy Buggy Records, Trashfuck Records, Nintendo Crash Records, Fuckin' Obskuyr Industries, and Dramacore are only a few examples of netlabels.