Originally BGP on its own was not capable of dealing with multiple customer routes and overlapping prefixes. MPLS deals with this issue by employing a BGP RFC 4760 and instead using MP-BGP with allows for the use of address families. This allows for an additional variable length number to be added in front of the BGP NLRI/prefix.
MPLS defined this new address family as Route Distinguishers (RD)
RD’s allow for BGP to distinguish which routes belong to which customer VRF table. By adding another number (the RD) in front of the IP prefix, it allows the customer route to remain unique on a device that has other customers with the same route.
The New MP-BGP NLRI format consists of a 64 bit Rd and a 32 bit IPv4 prefix. The RD has formatting conventions, the first 2 bytes identify which of the three formats is followed. Since IOS can determine which of the three formats is used based on the value, the IOS rd VRF subcommand only requires you to put in integer values for the last 6 bytes of the RD.
The RD can be configured in the following three methods: