I have been stumbling since last week to understand the concept behind AAL5Snap and AAL5Mux encapsulation. Finally I made my self clear by reading RFC 1483 which explicitly depicts about the difference and usage of both Atm Adaptation Layer 5 encapsulations. These encapsulations techniques are used when user willing to carry the multiple protocol traffic over PVC. It is defined in two ways:-
1. VC based Multiplexing (AAL5Mux)
2. Logical Link Control Encapsulation (AAL5Snap)

VC based Multiplexing (AAL5Mux) is used to carry one protocol per PVC. e.g. If we want to forward IP and IPX over ATM, in this case we need to define two dedicated PVC. One PVC will carry IP and another will carry IPX. As the number of protocols will increase, PVC will also increase.

Logical Link Control Encapsulation (AAL5Snap) is used to carry multiple protocols in single PVC. In this case user multiplex all the protocols in one PVC. To differentiate PDU, Logical Link Control header is added.