Network Function Virtualization (NFV) is about virtualizing network functions, normally deployed on dedicated hardware platforms (e.g. routers, load balancers, firewalls etc.) delivered by specialized telco vendors. The network functions are then run as virtual appliances on commodity hardware (IT servers) instead. This approach allows telco companies to cut costs. Instead of buying expensive specialized hardware, they can emulate the same functions the hardware allows but in the form of VMs or containers run on much cheaper standard hardware.
Some common networking terms clearly explained