MPLS L3 VPN allows companies to offer Layer 3 VPN services with advantages like scalability, security, and support for duplicate IP addresses and different network topologies. The key components that enable this are VRF tables on PE routers that separate routing information for each customer to avoid duplicate IP issues, and MP-BGP which customizes VPN routing information using a Route Distinguisher, VPN label, and Route Target to support different VPN topologies. MPLS L3 VPN provides services like multi-homed sites for redundancy, hub-and-spoke networks, internet access with security, and extranets for inter-company communication.