What is the purpose of LDP on an LSR?

LDP (Label Distribution Protocol) on a Label Switch Router (LSR) is primarily responsible for creating and maintaining a database of label bindings. These bindings map network layer reachability information (prefixes) to locally significant labels. This database enables hop-by-hop forwarding of MPLS packets, where each LSR uses the incoming label to look up an outgoing label and interface. "To allow a system-wide exchange of labels across the MPLS network" is too broad; LDP facilitates this but its core purpose is the database creation. "To create a label across the PE routers for end-to-end path assignment" describes a function more aligned with VPNs or traffic engineering, not the fundamental role of LDP on every LSR. "To communicate the routes known for a specific interface" describes a routing protocol's function, not LDP.