MPLS VPNs transport layer 2 packets across the network and encapsulate transport protocols such as ATM, Ethernet, and SONET, allowing MPLS networks to seemlessly upgrade and replace legacy layer 2 networks without requiring network reconfiguration or using protocols higher than layer 2. In comparison, layer 3 VPNs must use the layer 3 Internet Protocol (IP).

An Internet T1 (sometimes spelled T-1) is a high speed telecommunication line that can carry 24 digitalized voice channels, or it can carry data at a rate of 1.544 megabits per second.

Voice over IP (VoIP) sends voice data in packets using the Internet Protocol (IP) instead of analog waves as does plain old telephone service (POTS) lines.

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MPLS network is particularly important to businesses running applications that require latency such as VoIP, ERP, SAP, etc.

The wide-spread use of Ethernet has reduced the cost of Ethernet switches and also the space required to deploy Ethernet networks either via twisted pair copper or fiber and virtually all computer manufacturers include an Ethernet card as a standard component on Personal Computer (PC) motherboards which eliminates having to install an Ethernet card as a peripheral device.

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You can compare MPLS to Frame Relay and ATM technologies.

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MPLS can be used to facilitate layer 3 IP VPNs, layer 2 VPNs, Quality of Service (QoS), Class of Service (CoS) and to guarantee Service Level Agreements.