vlan 50 method of configuration consolidates all related statements onto the PE-CE logical interface. This is the easiest to understand if you are configuring manually or doing any kind of troubleshooting.
Imagine each method as just fragments within a large router config. In that context, it's suddenly quite clear which option makes most sense.
The routers within the backbone use a label distribution protocol: LDP or RSVP.
Each router binds a label to each IP prefix it knows about and advertises these labels to its LDP/RSVP peers.
Let's say router egress PE advertised its BGP loopback address to P3 with a label of 20. P3 then advertises it to P2 with a label of 21, P2 advertises this network to P1 ...