What are the benefits of a Layer 2 MPLS VPN to a service provider and to an enterprise customer?

To a service provider, this is a significant migration step toward a single IP- and MPLS-based infrastructure for all services. Existing tail-circuit technology (Frame Relay or ATM) can be re-used. This not only makes the transition familiar to operators and maximizes the service provider’s investment, but also retains the operational simplicity of those existing technologies (thus no responsibility for customer routing). Auto provisioning makes deployment easier at scale. By using label-stacking techniques, Layer 2 MPLS VPNs are specifically designed for scalability and for deployment in carrier-of-carriers environments. For enterprise customers, the scalability of this technology is well-suited to large corporations. 

MPLS can provide multiprotocol connectivity (IPX and SNA, for instance), and it also easily supports IP multicasting. Customers that are accustomed to managing their own routing domains can continue to do so. They can also deploy extra security, such as IPSec encryption.