NFS, or Network File System, is a form of network-based file system share available on almost all UNIX and Unix-like operating systems. For those familiar with Microsoft operating systems NFS is similar to CIFS or SMB file shares.
Generally NFS is considered insecure and as such it is recommended that the service be implemented only on restricted, trusted networks. That said the NFS service can be beneficial in use. A directory (or directories) on a server can be made available to computers on a network using NFS. One typical scenario of this is to store one (or more) user's '/usr' directory centrally and give the user access to it from any computer they login to (sometimes called a 'roaming profile' in Microsoft terminology). Other uses include a centralised ports repository to remove the necessity for each computer to run its own portsnap update.
The NFS service has, for a long time, been over shadowed by the popularity of CIFS from Microsoft and was almost considered a thing of the past. However, it has found a new lease of life in the field of virtualisation, in particular the corporate level products from VMware and XEN where it is used as a 'shared storage' for the virtualised hosts - even displacing established fibre-channel arrays and storage area networks, or SANs. Most NFS implementations in relation to virtualisation are in the form of NetApp appliances but should work on any NFS-enabled server, FreeBSD included. A blog article discussing VMware and NFS is available here.