It's MPLS, Multi-protocol Label Switching. The entire point of it is to switch multiple protocols based on their label. It doesn't even have to be IP traffic involved, it can be ATM or something instead. The label switching is the definition of the platform. What you are asking is like asking, "Why does a gasoline internal combustion engine use gasoline and oxygen to power its internal combustion?" Because it is designed to function that way. If it were designed to function another way, then it would be called something else.
If you want to know why MPLS would be useful in a given situation, you have to just read about its features to see how it could be helpful to an organization. For what it's worth, MPLS is largely being replaced by SD-WAN these days because SD-WAN can do similar things with less specialized equipment and with more features and integration with external controls and management platforms.