IP Virtual Reassembly

Virtual Reassembly is special IOS feature that allows the router to obtain full picture of a fragmented packet on the fly. When you activate virtual-reassembly on interface, using the command ip virtual-reassembly, IOS starts tracking all incoming fragmented packets. The code delays fragmented packets until it receives all of them, or until the maximum reassembly timeout expires (there are some other thresholds, discussed below). After this, the router performs “virtual” datagram reassembly. Here “virtual” means the packet is not getting actually assembled into a single entity, but rather IOS views it as a whole for subsequent processing. If the router does not receive all fragments during the reassembly timeout, the incomplete packet is dropped.

Ref: http://blog.ine.com/2008/11/05/dealing-with-fragmented-traffic/
http://www.cisco.com/en/US/docs/ios/12_3t/12_3t8/feature/guide/gt_vfrag.html