Route Distinguisher - Definition from the Hotspot Shield Glossary

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 12.0.0.0 of one device, and 12.0.0.0 of another? For this to happen, a unique route distinguisher must be added to each packet arriving from the different customers devices.