Multicast Label Distribution Protocol (MLDP) in-band signalling to enable the MLDP core to create (S,G) or (*,G) state without using out-of-band signalling such as Border Gateway Protocol (BGP) or Protocol Independent Multicast (PIM).
MLDP-supported multicast VPN (MVPN) allows VPN multicast streams to be aggregated over a VPN-specific tree.
No customer state is created in the MLDP core, there is the only state for default and data multicast distribution trees (MDTs).
In certain scenarios, the state created for VPN streams is limited and does not appear to be a risk or limiting factor. In these scenarios, MLDP can build in-band MDTs that are transit Label Switched Paths (LSPs).
Trees used in a VPN space are MDTs. Trees used in the global table are transit point-to-multipoint (P2MP) or multipoint-to-multipoint (MP2MP) LSPs.
In both cases, a single multicast stream (VPN or not) is associated with a single LSP in the MPLS core. The stream information is encoded in the Forwarding Equivalence Class (FEC) of the LSP. This is in-band signalling.
LSM provides benefits when compared to GRE core tunnels that are currently used to transport customer traffic in the core and It leverages the MPLS infrastructure for transporting IP multicast packets, providing a common data plane for unicast and multicast.
For more details, check the below document by Sabyasachi Kar and Shashi Shekhar Sharma: