Lets say your VFD pump is supplying flow at 100GPM to just a single coil in the loop....

Your air handler unit has a coil receiving this 100gpm. Temperature is then regulated by
controlling the flow of water through the coil. You could do this by either controlling
flow with the pump and/or using flow control valves.

If you use a valve (2-way) you do lower flow through the coil you will also lower the
flow in the chilled water loop and cause a rise in backpressure. The pump would then
have to slow down to lower the pressure. Because of the low flow rate water in the piping
between the coil and chiller will warm up and water in the chiller will cool down. Due to
the flow change you have a larger difference in water temps through the loop.

If a three way valve is used instead you can maintain a constant loop flow while adjusting
flow through the coil. A 3-way valve takes flow from an inlet opening and sends the flow
to two outlet connections (A & B). The inlet flow can be sent to either A OR B as well as
splitting the inlet flow proportionaly between the two outlets. The combined flow from
the A&B outlets equals the inlet flow.

So 100 gpm in to a 3way you can have 80% (80GPM) flow out of one outlet and the
remaining 20% (20GPM) flow out of the other.

Using a threeway in the air handler coil will allow you to divert some or all of the water
around the coil while maintaining the same 100 gpm flow rate in the loop. Since the flow
rate through the loop stays the same the water in the piping never gets a chance to warm
up nor does teh water in the chiller get a chance to over cool.

This keeps the pump and chiller system operating at a smooth speed even though it has a
VFD. By keeping a high flow rate in the loop you can maintain a quick response to
temperature swings in the coils. The 3 ways modulate cooling water through the coil with
out having to wait for cool water to be pumped to the coil.
If you had a two way valve that was nearly closed then had to open up the loop flow
would increase and it would take time for the cool water to travel to the coil and for the
rest of the system to respond. The net result is smoother system operation overall.

Above example was a single coil... Consider a series of parallel coils. If two way valve is
used the backbressure changes as described above. Changes in backpressure would also
effect the flow rate in the other parallel piped coils.
Therefore two way valves would cause system wide upsets and the need to readjust all
coil flows whenever a single coil flow was adjusted. the use of three way valves keeps
the total flow through and around a coil constant so that backpressure doesn't change.
Therefore flow rate through other coils would not be effected by the flow adjustment
through a single coil.