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MPLS (Multiprotocol Label Switching) has several functions. The MPLS Resource Center is a great resource. Here are a couple excerpts that may answer your questions.
MPLS stands for "Multiprotocol Label Switching." In an MPLS network, incoming packets are assigned a label by a label edge router (LER). Packets are forwarded along a label switch path (LSP) where each label switch router (LSR) makes forwarding decisions based solely on the contents of the label. At each hop, the LSR strips off the existing label and applies a new label which tells the next hop how to forward the packet.
Label Switch Paths (LSPs) are established by network operators for a variety of purposes, such as to guarantee a certain level of performance, to route around network congestion, or to create IP tunnels for network-based virtual private networks. In many ways, LSPs are no different than circuit-switched paths in asynchronous transfer mode (ATM) or frame relay networks, except that they are not dependent on a particular Layer 2 technology.
An LSP can be established that crosses multiple Layer 2 transports such as ATM, frame relay or Ethernet. Thus, one of the true promises of MPLS is the ability to create end-to-end circuits, with specific performance characteristics, across any type of transport medium, eliminating the need for overlay networks or Layer 2 only control mechanisms.
What problems does MPLS solve?
The initial goal of label based switching was to bring the speed of Layer 2 switching to Layer 3. Label based switching methods allow routers to make forwarding decisions based on the contents of a simple label, rather than by performing a complex route lookup based on destination IP address. This initial justification for technologies such as MPLS is no longer perceived as the main benefit, since Layer 3 switches (application-specific integrated circuit (ASIC)-based routers) are able to perform route lookups at sufficient speeds to support most interface types.
However, MPLS brings many other benefits to IP-based networks, they include:
- Traffic Engineering: The ability to set the path voice traffic will take through the network and to set performance characteristics for a class of traffic.
- VPNs: Using MPLS, service providers can create IP tunnels throughout their network, without the need for encryption or end-user applications.
- Layer 2 Transport: New standards being defined by the Internet Engineering Task Force's (IETF) Pseudo Wire Emulsion Edge to Edge (PWE3) and Provider Provisioned virtual private network (PPVPN) working groups allow service providers to carry Layer 2 services including Ethernet, frame relay and ATM over an IP/MPLS core.
- Elimination of Multiple Layers: Typically most carrier networks employ an overlay model where Synchronous Optical NETwork/ Synchronous Digital Hierarchy (SONET/SDH) is deployed at Layer 1, ATM is used at Layer 2 and IP is used at Layer 3. Using MPLS, carriers can migrate many of the functions of the SONET/SDH and ATM control plane to Layer 3, thereby simplifying network management and network complexity. Eventually, carrier networks may be able to migrate away from SONET/SDH and ATM altogether, which means elimination of ATM's inherent cell-tax in carrying IP traffic.
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