MPLS VPN is a feature of MPLS that allows Service Providers or large enterprises the ability to utilize layer 3 VPNs. These can be used to replace older Layer 2 VPNs such as frame relay or ATM.
MPLS VPNs are great because they are aware of the customers routes and when traversing an MPLS network remain private.
MPLS provides solutions for the following problems in a large scale shared environment:
Duplicate/Overlapping Customer Address ranges:
Having multiple customers connected to the same service provider network can introduce potential routing issues using simple IP unicast routing when all customer utilize the same IP address space on their networks.
MPLS VPNs address this issue by utilizing virtual routing tables or Virtual Routing and Forwarding (VRF) tables, which separate customer routes for each customer forwarding instance.