It stands for many things but the one that is most likely the correct answer is Volunteer Fire Department. It's an organization that used to be made of all good people that basically wanted the world to be better and more well read. But they had a schism and the group split in two. With the Baudelaire parents and others on one side and Count Olaf and others on the other side.

Valorous Farms Dairy
Various Finery Disguise
Veiled Facial Disguises
Venom Feels Delightful (Press)
Veritable French Diner
Very False Documents (Press)
Very Fancy Doilies
Versailles Post Office
Vice Principal Nero
Vineyard of Fragrant Drapes
Voracious Film Discussions (Press)
Vertical Flame Diversion
Verdant Flammable Devices
Volunteer Feline Detectives
Vernacularly Fastened Door

Sorry if this was long. :)

I used to read be ubsessed with these books and i came to the conclusion that V.F.D just stood for V.F.D It was the name of an organization that split into good and evil. They used V.F.D to stand for whatever was nescesary considering they are masters of disguise and going undercover and such. They had many codewords such as Volunteer Fire Department. But i dont think it had any exact meaning. And it was never given in the books.