Virtual LANs (VLANs) are used to segment network traffic into separate, isolated broadcast domains. This feature is beneficial because it can enhance network security by isolating sensitive data or devices within a specific VLAN and also helps in reducing broadcast traffic, which can improve the overall performance of the network. VLANs are a layer 2 concept, and they operate by tagging Ethernet frames with a VLAN ID. Other options such as 'Virtual Routing and Forwarding' and 'Network Address Translation' operate at higher layers of the OSI model and serve different purposes.