Every element has a shape, and so do the labels. It's a rectangle to start with, but it can be a circle, a star, a heart, a speech bubble and more. The background fills it, the border follows it, and it can cut off whatever is inside.

The shape control
Shape	26 of them: Rectangle, Elliptical (an oval, or a circle in a square box), Polygon, the snipped corners, Trapezoid, Partial Circle, Chord, Teardrop, Plaque, Cloud, the flow-chart shapes (Document, Tape, Input, Data, Storage and the rest), Double Wave, the two speech bubbles, Heart and Arrow.
Angle rounding	Rounds the corners, from 0% (sharp) to 100%. Double-click the slider for 0%. Elliptical and Cloud have none.
Flip	Horizontally, Vertically or Both - a speech bubble's tail on the other side, say. Not for Rectangle, Elliptical, Polygon, Plaque and Arrow, which a flip wouldn't change or which turning does as well.
Use shape as mask	On (as it starts), what's in the element is cut off at the shape: a picture in a circle comes out round. Off, it's cut off at the element's box.

For a Polygon
Vertices	How many corners, from 3 to 32.
Indentation	Pulls every other point toward the center, from 0% to 100%: that makes a star. Double-click the slider for 0%.
Rotation	Turns the polygon inside the box, on a dial - the element itself stays put.
Keep aspect ratio	Off, the polygon is stretched to fill the box. On, it keeps its proportions and sits in the middle.

Where it is. An element's Shape is in its Properties. The labels' shape is in the Layout panel, under Shape, and has no mask: it's the outline of each label, which the label's background and border follow.

The ⋮ menu next to Shape has Copy shape, Paste and Reset to defaults, which makes it a rectangle again.