Many times, Civil 3D objects are labeled in the "host" drawing. That being said, the dynamic relationship between civil objects and their labels will also work through an external reference. In fact, labeling objects through an XREF can give you even more flexibility over the placement of annotations.
Take for example the image below (left). Here we can see a model space view of a utility label sized for an intended plot scale of 1"=40'. The image on the right is the same DWG file after it is XREF'ed into an exhibit and viewed in a 1"=20' viewport.
In both cases, the label is properly sized for the respective plots, however, in the 20 scale exhibit I would like to move the label closer to the structure. Unfortunately, this isn't easily done because the label doesn't exist locally in exhibit drawing.
Fortunately there is no need to fight with XREF'ed labels. I can simply freeze their layers to hide them from view, and then create new labels in the exhibit drawing by leveraging Civil 3D's ability to recognize civil data through an external reference. Using this technique we can place labels in ANY drawing and the annotations will always remain dynamic to their respective objects!
If you are interested, I've created a quick recording showing how to add dynamic labels to Civil 3D content even if that content lives in an external reference.