A label is thus a fixed length, physically contiguous, usually locally significant identifier in the packet representing the FEC to which the packet was mapped.
Subsequent hops in the network use the information encoded as the "label" for forwarding rather than reevaluating an FEC. At each hop, the label is referenced against a table of incoming labels to outgoing labels and interface mappings called the Label Information Base(LIB). The incoming label is replaced by the outgoing label and the packet is forwarded to the appropriate interface.
The MPLS scheme thus provides an efficient mechanism for forwarding packets from source to destination than the hop-by-hop basis used in traditional routing. MPLS also facilitates controlling traffic patterns using Traffic Engineering as it gives a granular control over the path that a packet follows. The path followed by a packet once it enters an MPLS domain can be determined using a number of factors like the incoming interface or the FEC to which the packet belongs or or on the ingress LER or even using a predetermined path.
Since the path followed by a packet is known right at the ingress, this information can be used to forward the packets to alternate paths in case of any failure along the original path. MPLS framework thus provides a better mechanism to handle failures in the network, as the backup paths can also be pre-determined and hence provide a faster recovery technique. Such schemes are called Path Protection Schemes in MPLS.
An additional benefit that MPLS provides is that upgrades to the protocol can be done easily because the forwarding and control components are separate. The forwarding component is responsible for transporting a packet based on a routing table. The control component is responsible for the construction and maintenance of the routing table, as well as working with the control components of other nodes to disseminate routing information.