The information needed to typeset using a particular font is contained in two files: a metric file that contains shape-independent information and a glyph file that contains the actual shapes of the font's characters. A virtual font is an optional additional file that can specify special ways to construct the characters. TeX itself (or LaTeX) look only at the metric file, but DVI drivers such as Dvips look at all three of these files.
An encoding file defines the correspondence between the code numbers of the characters in a font and their descriptive names. Two encoding files used together can describe a reencoding that rearranges, i.e., renumbers, the characters of a font.