recently I have seen multiple similar pages being shown by google for one keyword. Earlier there used to be only one page ranking for the website. Because of this, my rank, though being 7-8 on counting, comes on the 2nd page in SERP. Can someone help me understand this issue.
These are called indented search result listings. Google began testing this in July and then just this month rolled it out in full. According to Moz, this affects 40% of SERPs. This is definitely a big change for Google where they previously discouraged including the same domain multiple times on a single search result. You are right that it means lower ranked pages will push to page 2. Related to that, ranking in the first three positions is far more critical than it has been in the past.
Unfortunately, there isn't much that we can do about this--either to get the indented listing or to combat competitors who do. It seems like Google is bringing in similar pages as the indented result but not pages that seem to be duplicated. So, one potential thing to try is making sure that any closely related pages on your site (pages about the same topic) establish the relationship between the pages while also clearly differentiating each page's intention. For example, one page reviews a particular type of products sold while another page explains how to use those proudcts, and a third page tells people how to buy the products. All three pages would be linked to each other and use similar keywords, but you want to make the different intentions clear. No guarantee that will result in the indented result but it might help.