Route distinguishing is used so routers can understand which packets of data belong to which device on an MPLS VPN network. A standard IPv4 address is made up of the actual 32bit address - A VPN IPv4 address is made up of a 32bit IP Address and a prefixed 64bit Route Distinguisher; this address is known as a VPN-IPv4 address.
Full definitions of a route distinguisher can be found in IETF’s RFC 4364. An example of route distinguishing can be seen here - How can a PE router distinguish between IP address 184.108.40.206 of one device, and 220.127.116.11 of another? For this to happen, a unique route distinguisher must be added to each packet arriving from the different customers devices.
Join over 500 million users already enjoying absolute Internet Freedom around the world by downloading Hotspot Shield VPN.