4.1.a [i] Label stack, LSR, LSP
As packets are forwarded in a label-switching framework , MPLS routers encapsulate the packets with special headers called labels. A label basically tells the router which Label Switched Path (LSP) it belongs to. The router can then use the ingress port and the LSP information to determine where the next hop in the LSP is. You can actually add labels to packets that already have labels (known as label stacking).
A MPLS router that performs routing based only on the label is called a label switch router (LSR) or transit router.
An LSP is a path through an MPLS network, set up by a signaling protocol such as LDP, RSVP-TE, BGP or CR-LDP. The path is set up based on criteria in the Forwarding Equivalence Class (FEC).
In order to scale an MPLS network, where there are different types of platforms and services in parts of the network, it makes sense to split the network into different areas. A typical design introduces a hierarchy that has a core in the center with aggregation on the side. In order to scale, there can be different Interior Gateway Protocols (IGPs) in the the core versus the aggregation. In order to scale, you cannot distribute the IGP prefixes from one IGP into the other. If you do not distribute the IGP prefixes from one IGP into the other IGP, the end-to-end Label-Switched Paths (LSPs) are not possible. In order to deliver the MPLS services end-to-end, you need the LSP to be end-to-end. The goal is to keep the MPLS services (MPLS VPN, MPLS L2VPN) as they are, but introduce greater scalability. In order to do this, move some of the IGP prefixes into Border Gateway Protocol (BGP) (the loopback prefixes of the Provider Edge (PE) routers), which then distributes the prefixes end-to-end. This is called unified or seamless MPLS.
RRs advertise the BGP prefixes with the next hop set to themselves, they assign a local MPLS label to the BGP prefixes. This means that in the data plane, the packets forwarded on these end-to-end LSPs have an extra MPLS label in the label stack. The RRs are in the forwarding path. In order to set the next hop to self for reflected iBGP routes, you must configure the neighbor x.x.x.x next-hop-self all command.
Adam, Paul (2014-07-12). All-in-One CCIE V5 Written Exam Guide (Kindle Locations 4349-4360). . Kindle Edition.