RFC is used to call the function module from the remote
system, where as normal functin module is used within the 
system.

RFC is Remote Function Call which can be used to execute 
the function module on remote system to get the required 
data.To call the function module remotely,we have to enable 
the remote call radio button located in the attribute of 
the function module.
  Normal function module is one which can be used to 
execute the function module in the local system to get the 
required data.

RFC stands for REMOTE FUNCTION CALL RFCs are used to
establish a connection between two different application
servers rfc used for accessing functions of a function
module in a function group present on different application
servers with in a landscape i.e., for transfer of data
directly between source and target client on remote systems
in sap system landscape.

in sap basis rfc is used for remote client copies.
Tcode RFC- sm59 display/maintain

FUNCTION MODULE contains functions in particular to a module
like finance , HR , MM....... .Function module is always
created under function group. one group can contain one or
more function modules a function module can be accessed from
 remote system where u can call it as RFC call.
u create function module in following way 
1.tcode- sm37
2.create a function group 
3.activate the function group
4.create the function module 
5. activate the function module 
6. access the function module

hope i answered your question 

--best regards 
--samiuddin syed
  SAP BASIS ADMIN

RFC, to connect two different SAP Servers to transfer data 

bt normal function calls r like subroutines to access 
within the sysetm.

Dear,
All the above said answers are correct there is one more
question unanswered. What is different RFC doing and not the
fn module?
The die ifference is in the way parameters are passed the
import export n the table parameters.
In fn module its by reference(passing memory address) if a
parameter's address is passed will the remote system
identify it ? wouldn't hence the concept RFC evolved to
solve it the mode of passing data is by value.
Cheers.

RFC function module: RFC  creation  and it's call is 
          existing in  different clients.
Normal function module: the funxtion module and it's call 
                is in the same clients.

Hi,
The Difference between RFC and Normal Function Module is 
RFC Stands for Remote Function Call and Normal Function 
Module is without RFC Connection.For a Successful RFC 
Connection one should check OS level(Ip Address and 
HostName fo Target Machine),Logical System Name(Sale/BD54) 
and Communication User(SU01).Where as for Normal Function 
all this is not required.