Serverless Functions are a key component of the serverless architecture, enabling developers to run code in response to specific events without the hassle of provisioning and managing servers. When an event occurs, such as an HTTP request, a file upload, or a message in a queue, the cloud provider automatically allocates resources to execute the function. This leads to reduced operational overhead and cost efficiency as you are only charged for the compute time consumed during execution. Serverless Functions are stateless and can be triggered by various cloud services, which allows for impressive flexibility in building applications.