Hello Vishal,
Virtual Routing and Forwarding (VRF) is an IP technology that allows multiple instances of a routing table to co-exist on the same router at the same time. Because the routing instances are independent, the
same or overlapping IP addresses can be used without conflict. “VRF” is also used to refer to a routing table instance that can exist in one or multiple instances per each VPN on a Provider Edge (PE) router.
Basically you can have n number of customers and have each customer assigned a VRF with a unique RD. This will create a seperate instance for routing. The benefit for creating VRF would be you can over lapping IP address for your end customers. Internet service providers (ISPs) often take advantage of VRF to create separate virtual private networks (VPNs) for customers; thus the technology is also referred to as VPN routing and forwarding. Because the routing instances are independent, the same or overlapping IP addresses can be used without conflicting with each other.
HTH,
Nikhil
