What is Application Request Routing (ARR) extension for IIS used for

IIS Application Request Routing offers administrators the ability to create powerful routing rules based on the URL, HTTP headers, and server variables to determine the most appropriate Web application server for each request. ARR makes request routing decisions at the application level, and can be used in conjunction with hardware load balancers or Windows Network Load Balancing as an added layer of control over HTTP requests. In addition, ARR enable hosting providers to route requests from clients to specific Web application servers in a server farm by creating an affinity between the client and server.

It depends on the following software components

URL Rewrite
Web Farm Framework
External Cache module

References

[1] http://www.iis.net/downloads/microsoft/application-request-routing