As the name UDF is self explainotry "User Defined Function". It means that whenever in mapping your requirement is not fulfilled by the standard functions, the we think about UDF creation for mapping. UDF can be used in complex situations like:
1. If you are having a scenario IDoc to File, and in which you are sinding some account information like sumrized amount (per GL Account Number) to file, then standard function will not help you. In this case you have to go for an UDF.
2. It can also be used for R/3 lookups, to searching any value in R/3 tables. (But it creates performance issue, since every time you run your scenario it will hit the R/3 database which is not good).
For 1st one you have to create UDF as per need. But in case of 2nd you can go for Value mapping Replication, which will be good instead of using RFC Lookup.
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