Hi Robert,
Normally, L2 VC will be created between PE using Targeted LDP (dynalic way of establishing the circuit). The VC labels used to identofy the VC will be advertised to remote PE via T-LDP session. Static PW is a way of seting up the L2 VC without Targeted LDP. As with this approach, we dont have the control session between PE, we need to statically define the VC labels (both local and remote) so that the PE can use to identify the VC.
If you dont have any pressing reason, it is better to go with T-LDP approach. This is dynamic approach.
To answer your specific queries,
I would like to know how this local-label and remote-labels are used in the mpls network.
The command will help to configure the local label that this PE will associate with the VC and the remote label that this PE will use while sending a packet via the VC. For example, if you have "mpls label 100 200" configured under VC 100, it says any packet received with label as 100 will be sent via the interface under which xconnect is configured and any packet received from that interface will be sent to remote PE with label as 200.
Does this mean there is no intermediate Provider routers between the PE routers?
It doesnt matter if or not there is any itnermittent provider router. PE will bring the VC up only if the egress interface to reach the remote PE is mpls enabled and have a label ( null or non-null label).
HTH,
Nagendra
