Routed IPsec allows IPsec tunnels to be configured and used like interfaces, allowing routing and dynamic routing protocols to be used. It utilizes Virtual Tunnel Interfaces (VTI) in FreeBSD. Benefits include more natural traffic flow respecting routing, no need for extensive policy definitions, and integration with other routed IPsec implementations. It is available in pfSense snapshots and 2.4.4, with some limitations around reply-to and NAT. Configuration involves choosing a transit network, setting up Phase 1 and 2 with the VTI mode, assigning the ipsec interface, and setting routing or firewall rules. Examples of static routing, dynamic routing with FRR, and policy-based routing were provided.