As such, now seems like a good time to learn how the technology works, how it can be deployed, and what issues still need to be addressed. This isn't surprising, considering the technology consists of several standards and control protocols, each of which addresses a different problem. Let's start by unraveling some of the threads. The MPLS data flow resembles circuit-switching. In other words, MPLS is an encapsulation protocol.
Labels are nothing new.
A label is nothing more than a number that uniquely identifies a set of data flows on a particular link or within a particular logical link. What's advantageous about MPLS is that it has taken an ATM-like concept and made it generic. The IETF MPLS working group decided that, whenever possible, MPLS should use existing label formats. In other words, an LSR can switch a labeled packet from any interface to any other interface with a new label. This is far more flexible than ATM, which is restricted to cell-based links.