NFSS was an extension to LaTeX written by Frank Mittelbach and Rainer Schöpf. It is described in TUGboat 10(2). In traditional typesetting, fonts are described by four parameters: the family (e.g., computer modern), the series (i.e., the weight and width of the font, such as light or bold), the shape (e.g., italic), and the size. NFSS is a mechanism allowing the user to change any of these independently. NFSS makes it relatively easy to use nonstandard fonts such as the PostScript ones with LaTeX, and easy to change maths fonts. It also allows dynamic loading of fonts at runtime (i.e., not when the format file is created).
With the demise of LaTeX 2.09 as supported software, the label `NFSS' has become somewhat misleading, as there's no `old' scheme with which to contrast it - LaTeX has incorporated the NFSS.