You are correct that Appearance is not an option of Manipulate. Note that it does not appear in the options position of the function (i.e., the sequence of arguments of the function at the end. In fact what is being done here is that the Appearance option is being passed into the user interface element that the iterator list it appears in creates. In fact the case where you might want to have Appearance->"Labeled" is exactly the case where the iterator will be a Slider. And this is created internally within Manipulate using the function Manipulator. You might then think that executing

SetOptions[Manipulator, Appearance -> "Labeled"]

Would solve the problem. And in fact if you do this and then execute

Manipulate[x, {x, 1, 10}]

the result will be a Labeled slider. However, if you close your Mathematica session and then reopen it, the resulting Mathematica session no longer has the Manipulator option set to Appearance -> "Labeled" because the new Mathematica session has reset it to its default.

So the short version of this is that it generally is better to explicitly put the Appearance -> "Labeled" option in the iterator explicitly. Also this allows someone else who is reading the code to see exactly what is explicitly intended.