The fundamental concept behind MPLS is that of labeling packets. In a traditional routed IP network, each router makes an independent forwarding decision for each packet based solely on the packet’s network-layer header. Thus, every time a packet arrives at a router, the router has to “think through” where to send the packet next.
MPLS stands for Multi-protocol Label Switching. MPLS is a packet forwarding technology that is capable of carrying any L3 protocol and here comes the word multi-protocol. MPLS is capable of tunneling L3 packets inside the MPLS network using MPLS labels.