IP/MPLS (IP multi-protocol label switching) is a carrier an enterprise technology that enables very fast switching of data. Typically, with IP routers, the packets require to be examined for the source and destination addresses, in order for the control function of the router to determine via routing table look up the optimum interface to send the packets to the destination. Unfortunately, this takes time, however with IP/MPLS engineers came up with an alternative, encapsulation of the IP packet within a packet with a header label, hence the name label switching.
What this means is that the router no longer forwards packets based on a software dependent and longer look-up in the route table but fast switches packets based on the label. This delivers huge performance benefits as well as flexibility. The multi-protocol part of the name derives from the fact that by encapsulating packets with an MPLS label means that anything can be transported across the MPLS network regardless of the underlying protocol.
MPLS also has very attractive features such as VPNs at both layer 2 and 3 levels. The beauty of IP/MPLS is that companies can extend a LAN across vast distances thereby connecting remote offices as if they were conjoined. Similarly, they could support VPN’s at layer three by connecting remote offices, third parties and partners using address routing, regardless of the private address scheme used by each entity. For example, one office could use private address space of 172.16.10.x and another remote office could be assigned the same, but with MPLS, they could both communicate without having to readdress their respective IP schemes.