The fpe command instructs the SR OS system to build an LSP tunnel over the PXC. This tunnel is used to multiplex PW traffic to respective PW-ports. Each external PW is switched to an internal PW (on top of this tunnel) and its payload is off-loaded to a respective PW-port.
After the fpe is configured (see the 7450 ESS, 7750 SR, 7950 XRS, and VSR Interface Configuration Guide, "Forwarding Path Extensions"), the SR OS system automatically configures steps 1, 2 and 3 in Figure: Building the internal LSP over PXCs. The objects created in steps 1, 2 and 3 can be seen via show commands. However, they are not visible to the operator in the configure branch of CLI.
The significance of the pw-port command under the FPE is to inform the system about the kind of cross-connect that needs to be built over PXC – in this case this cross-connect is PW-port specific. Applications other than PW-port may require different functionality over PXCs and this is reflected by a different command under the FPE CLI hierarchy (for example, vxlan-termination command instead of pw-port).
Note that the IP addresses setup on internal interfaces on PXC sub-ports are Martian IP addresses and they are shown in CLI as fpe_<id>.a and fpe_<id>.b.