The ifcfg-eth0 type files are created in response to configuring the interfaces wi thte redhat scripting scheme "system-config-network". Also during installation these interfaces may be recognized and the file created. You should NOT edit these manually. Errors from manual editing may cause severe and difficult to diagnose problems.
These files are shell variable definitions which are included and used in the scripts (ifup, ifdown, ifcfg, /etc/sysconfig/network-scripts/*, ...). To gain a detailed understanding for how the NETWORK variable is used, view the scripts.
It seems to be used for route table and ipsec setup among others.