Step 1 :
Factor out common factor $ \color{blue}{ mn } $:
$$ m^3n-mn^3 = mn ( m^2-n^2 ) $$Step 2 :
Rewrite $ m^2-n^2 $ as:
$$ \color{blue}{ m^2-n^2 = (m)^2 - (n)^2 } $$Now we can apply the difference of squares formula.
$$ I^2 - II^2 = (I - II)(I + II) $$After putting $ I = m $ and $ II = n $ , we have:
$$ m^2-n^2 = (m)^2 - (n)^2 = ( m-n ) ( m+n ) $$