Jim Henson described it best when he said that Labyrinth "is about a person at the point of changing from being a child to being a woman.  Times of transition are always magic.  Twilight is a magic time and dawn is magic-the times during which it's not day and it's not night but something in between.  Also the time between sleeping and dreaming.  There are a lot of mystical qualities related to that, and to me this is what the film is about."
     Labyrinth is a film that combines traditional fairy tale elements with a story line that at times recalls books such as The Wizard of Oz and Through the Looking Glass.  The heroine, Sarah, is a somewhat self-absorbed teenager who resents her baby half-brother, Toby.  In a reckless moment, she wishes aloud that the King of the Goblins would kidnap the child.  Jareth (The Goblin King) obliges, and Sarah spends the balance of the movie trying to retrieve her sibling by penetrating a maze--the labyrinth of the title--that surrounds Goblin City and Jareth's castle, where Toby is hidden.  She is assisted in her quest by Hoggle, Ludo, and Sir Didymus, but eventually must confront Jareth on her own. In doing so, she vanquishes her adolescent demons, bringing herself and the baby safely back to the everyday reality of her home. (Personally, I would have liked to remain with Jareth!)
    Sorry if I just ruined the ending for you.  But don't worry, the pleasures of the tale are in telling and the telling is essentially visual.  I wouldn't do the settings justice to try and describe them to you, so if you haven't seen this movie yet........GO SEE IT!
 
 
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Descriptions taken from Jim Henson The Works.  The Art,  the Magic, the Imagination.