The IFERROR function is designed to trap errors and perform an alternate action when an error is detected. The VLOOKUP function will throw an #N/A error when a value isn't found.
By nesting multiple VLOOKUPs inside the IFERROR function, the formula allows for sequential lookups. If the first VLOOKUP fails, IFERROR catches the error and runs another VLOOKUP. If the second VLOOKUP fails, IFERROR catches the error and runs another VLOOKUP, and so on.
The Excel IFERROR function returns a custom result when a formula generates an error, and a standard result when no error is detected. IFERROR is an elegant way to trap and manage errors without using more complicated nested IF statements.