Hi
Its something similar to VLAN concept in layer 2 here with VRF you are separating the routing table based on the VRF it belongs to.
With VRF's you will have individual routing instance as well as routing table for each VRF.
Regarding the IOS yes you need to have different feature set something like Service Provider feature set to have VRF's configured in your boxes..
I dont think your current IOS IP base will be able to support it...
regds