<human>: Can you provide a brief overview of the text?

A close friend went through this situation a few months ago, and it still puzzles me looking back on it.  I got curious about what the majority opinion would actually be.

Here is the story in a simplified form:

Guy and Girl start dating.  After a few months, Guy says he loves her and she says she loves him back. He continues to say that he loves her throughout the relationship.  After a few more months, she wants a label.  They fight.  He says she's obsessed with labels and crazy.  She says he's afraid of commitment.

They compromise.  She won't label them "boyfriend" or "girlfriend", but he must assure her that they are monogamous.  They agree to date exclusively and a rose is just as sweet by any other name, yada yada yada.

Flash forward a couple of years.  Everyone knows them as a couple.  Introductions are made to parents.  They talk about moving in together.  No cheating (that I know of) has occurred.  Guy starts to becomes concerned with his career and breaks up with Girl so he can move for work.  

Then Guy says that they were never in a relationship anyway.  They were just having sex as friends with benefits, nothing more.  She was just a friend and they could still be friends if she wants.  Girl is devastated.

Was he right?  Are labels really that important?  It's still on my mind because it seems like a nightmare situation.  Obviously, I'm biased to think he's an insane dick because I'm friends with the girl.  But more than a few have said that it's her own fault and she should have expected these turn of events for not demanding the "girlfriend" title.
<bot>: What does reddit think about labels in relationships?  Are they necessary?  Should you expect things to go wrong or should not get attached without them?