L2 MPLS VPN works on switching infrastructure as we all known and also has some limitations like works only point-to-point links, only for shorter disance etc. Likewise, L3 MPLS VPN works on routing infrastructure which has protocol support of MP-BGP,EIGRP and OSPF. More details on the following PDF.
http://www.netcraftsmen.net/welcher/seminars/mplscon05-buyersguide.pdf