What is the use of Gemfile in rails?

Gemfiles are configuration for Bundler, which is used to manage your application's Ruby dependencies. That website includes a lot of documentation, including the Gemfile manual page.

Your system can have lots of gems ... thus can have multiple versions of same gem.

A Gemfile specifies the list of gems with their versions that shall be used/loaded/(install if not present) whenever you run your rails application. or anything with bundle exec . .