Network functions virtualization (NFV) is the replacement of network appliance hardware with virtual machines running software and processes, controlled by a hypervisor.
NFV allows for the separation of communication services from dedicated hardware, like routers and firewalls. This means network operations can provide new services dynamically and without installing new hardware. Also, the virtualized services can run on generic servers instead of proprietary hardware.
Some additional benefits of NFV include the option for pay-as-you-go models, lower operational costs from fewer appliances and the ability to quickly scale the network architecture.