It’s all about the functions

AWS Lambda is similar to how a platform as a service (PaaS) works. In a platform as a service, you typically create an application and deploy it to a PaaS. Once deployed, the PaaS manages the operational aspects of the application, including scaling and high availability. Notable PaaS products include Heroku, Cloud Foundry, AppEngine, and OpenShift.

Microservice architectures have been gaining popularity, where applications are broken into much smaller pieces (services) to enable better scalability, more agile development, among other benefits. Lambda embraces this philosophy, and allows developers to deploy a single function at a time. Once deployed, Lambda will manage the operational aspects of that function, from scaling to high availability. This is why many people use the term function as a service (FaaS) when describing AWS Lambda or Serverless architectures.