VFDs and DFCs are similar technology, so overlap. Broadly though, here’s the main differences:

Both are more efficient than static and rotary converters. The electronics are smart, which isn’t always an advantage.
VFDs are usually aimed at motors, so in addition to speed control, they provide start/stop management (ramp up and braking), max/minima settings, pendant control, and terminals for the machine’s emergency stop etc. NVR is built in. The host of options available make VFD manuals intimidating. As usual with electronics, VFDs very expensive when they first appeared, now delightfully cheap! Main restriction is they are for one motor only – wire in permanently; do not share.
DFCs are general purpose, providing 3-phase from single-phase without motor control options, but hardened to deal with mixewd loads. They’re a good alternative to a rotary converter. Until recently DFCs were significantly more expensive than a rotary, but I see prices have dropped. If the market is big enough, they will drop further. Good for powering machines that break the one VFD per motor rule – such as one fitted with a two speed motor with a single-phase coolant pump and lamp hung off the phases. These should ‘just work’ plugged into a DFC, and two or more awkward beasts of that type can share one.
So:
- Upgrading a Myford with a 3-phase motor, best done with a VFD. It provides NVR, emergency stop, and speed controlled forward/reverse from a pendant. The VFD is cheaper than a DFC. (Unless it’s a TriLeva, where speed control is provided mechanically! Designed before VFDs existed. )
- DFC is a better option for powering a Bridgeport with a pancake dual speed motor and mixed accessories, especially if the workshop has other 3-phase kit that don’t need speed control, such as a compressor. They can share the DFC
Choosing between a DFC vs rotary is about cost, space and noise. Rotary used to be cheaper than DFC, not sure that’s still true! My workshop has no space for a rotary and the noise would be unwelcome. Rotaries waste lots of electricity, so, if much used, an expensive to buy DFC may pay for itself.
Static converters are cheap and cheerful. Inefficient and basic, they can be shared. But the 3-phase is poorly balanced, so motors cannot produce full power, and some may refuse to start. If they work, hurrah, but static converters are far from ideal.
As an aside, Clive said it was necessary to buy a VFD rated much higher than the motor. I think this is untrue, and least in this century. VFD’s are smart. They work by measuring the output voltage and current and adjusting the drive such that they don’t blow themselves up. Their electronics are sophisticated, intrinsically “soft-start”, not like a mechanical ON/OFF switch, where a motor draws all the power it can with a wallop! I’ve never seen a VFD manual that said ‘buy n-times bigger than the motor’. Anyone have a reference that contradicts me?
Dave