Hello Ananth
VRFs allow you to create multiple routing instances within a specific router. The implementation of VRFs is useful in a multi-tenant situation, where you may be serving multiple customers using the same physical network infrastructure. Specifically, VRFs are used to keep customer traffic and routing separate, but using the same physical hardware.
VRFs are implemented in the following situations:
- Datacenters in a colocation arrangement where multiple “tenants” have a presence and require a logically separate routing fabric
- MPLS VPN uses VRFs extensively to achieve its operation
- Corporate buildings with multiple tenants can employ VRFs in their hardware to accommodate multiple corporate entities each with their own virtually separate and independent routing domain.
I hope this has been helpful!
Laz