Q:

Why does ref link to section instead of label?

I want to refer to a figure within a section (say 1.2), using \ref{fig:xyz}
Section:
\section{XYZ}

Figure:
\begin{figure}
    \includegraphics[width=1\linewidth]{xyz.jpg}
    \label{fig:xyz}
    \caption[XYZ]
\end{figure}

When I add \ref{label:001} to my document, it does not link to the figure, but to the section (1.2).
What can I get it right?

A:

You have to put \label after \caption - and everything will work.
Thus, your figure will now be:
\begin{figure}
    \includegraphics[width=1\linewidth]{xyz.jpg}
    \caption[XYZ]
    \label{fig:xyz}
\end{figure}

