The down bit in the options field of the OSPF LSA header

The down bit in the options field of the OSPF LSA header.

The sending PE  router redistributes the  OSPF route into  MP-BGP, copies the OSPF cost into  the MED  attribute,and  sets the  BGP extended  community  to indicate the LSA type from which the route was derived.

The receiving PE  router redistributes the   MP-BGP route back  into OSPF and  uses the original  LSA type  and the MED attribute  to generate an  interarea summary LSA, an interarea   summary LSA or  type  3 LSA  is always  generated because the receiving PE router   acts as an  ABR  between the  superbackbone  and  the  OSPF area (or areas).

When OSPFv2 is used on a PE-CE link that belongs to a particular VPN, the  PE router must redistribute  to that VPN’s  OSPFv2 instance certain  routes that have been installed in  the BGP routing table.   Similarly, a PE router  must redistribute to BGP routes that have been installed in the VPN-specific  OSPF  routing tables.
When the PE receives, from a CE router, a type 3, 5, or 7 LSA with the DN bit  set, the information  from that LSA  MUST NOT be  used during the  OSPF route  calculation.  As a result, the LSA  is not translated into a BGP  route.  The DN bit MUST be ignored in all other LSA types.

The down bit  is used between  the PE routers  to indicate which  routes were  inserted into the OSPF topology database from the MPLS VPN superbackbone  and  thus shall not be  redistributed back in the  MPLS VPN superbackbone. The  PE router that redistributes  the MP-BGP route  as an OSPF  route into the  OSPF topology database sets the down bit. The other PE routers use the down bit to  prevent this route from being redistributed back into MP-BGP

This prevents routes learned via  BGP from being redistributed to  BGP. (This restriction is analogous to the usual OSPF restriction that inter-area routes that are learned from area 0 are not passed back to area 0.)

Note that the DN bit has no other effect on LSA handling.  In particular,  an  LSA  with the  DN bit  set will  be put  in the  topological database,  aged,  flooded, etc., just as if DN were not set.

But to prevent  the customer  sites from  acting as  transit parts  of the   MPLS  VPN network, the OSPF route selection rules in PE routers need to be changed.   The PE routers  have  to ignore   all OSPF  routes  with  the down   bit set,  because these routes originated in  the MP-BGP backbone and the  MP-BGP route should be used  as the optimum route toward the destination.

This rule is  implemented with the  routing bit in  the OSPF LSA.  For routes   with the  down bit  set, the  routing bit  is cleared  and these routes never  enter the IP routing  table―even if they are  selected as the best  routes by  the shortest path first (SPF) algorithm.  - no capability vrf �C

The down bit stops  the routing loops between  MP-BGP and OSPF. The  down bit   cannot, however, stop the routing loops when redistribution between  multiple  OSPF domains is involved

http://anetworkerblog.com/2009/08/29/downbit/