The featured posts section is the "The Favorites" widget that appears after the 3rd and 4th post on the home page. You can display the 3 latest posts from a specific label (you can't add more than 1 label) or you can add the label Featured to the 3 posts you want to highlight.
Go to Layout > scroll down to the "After 4th Post" widget area > open the "Featured Posts" widget.
- Title - replace The Favorites with your own title (don't remove the quotation marks around the title!)
- Label - Featured is added as a label by default, so you can either add it to the 3 posts you want to highlight or replace Featured in the code with the label you want to display posts from
Important! Blogger's labels are case-sensitive, so make sure to write the label exactly the same way in both places (posts + HTML). For example, Blogger will consider featured and Featured to be two different labels. So if you write the label as Featured or FEATURED in your posts, write it the same way in the featured posts's HTML.
Here's the HTML of the featured posts section (in case you delete it or there's an issue):
<script type="text/javascript">
var numposts = 3;
var heading = "The Favorites";
</script>
<script type="text/javascript" src="/feeds/posts/default/-/Featured?published&alt=json-in-script&callback=featuredposts"></script>