To build a virtual font with Afm2tfm, you specify the `-v' or `-V' option. You can then specify an encoding for that virtual font with `-t tex-enc'. (`-t' is ignored if neither `-v' nor `-V' is present.) Any ligature and kerning information you specify in tex-enc will be used in the VPL, in addition to the ligature and kerning information from the AFM file.
If the AFM file has no entry for a character specified in tex-enc, that character will be omitted from the output VPL.
The `-t' option is likely to be needed when you have a PostScript font corresponding to a TeX font other than a normal text font such as Computer Modern. For instance, if you have a PostScript font that contains math symbols, you'd probably want to use the encoding in the `texmsym.enc' file supplied with Dvips. (For a start; to actually get usable math fonts, you have to define much more than just an encoding.)