H-VPLS (Hierarchical Virtual Private LAN Service) is a way to scale VPLS. The issue with VPLS is that it requires a full mesh of PWs (PseudoWires) between PEs. This doesn’t scale. In order to address this shortcoming, two types of PEs exist with H-VPLS: U-PE and N-PE. The User facing PE (U-PE) is the router connecting to the CE and the N-PE. Network facing PE peers with U-PEs and N-PEs. The U-PE only need to have a PW to the N-PE. But the N-PE still needs a full mesh of PWs to all other N-PEs, and also a PW to each U-PE.

This blog post on Jacob’s blog will provide you with much more background on Split Horizon and why we don’t want L2 loops. You can also read more about Data Plane and Control Plane and you can go in-depth with H-VPLS Configuration.