Functions allow programmers to organize Python code into reusable chunks. They take in parameters, perform tasks, and return outputs. Variables used inside functions have local scope, while those outside have global scope. Functions can take different argument types like required, keyword, default, and variable arguments. Functions are first-class objects in Python - they can be defined inside other functions, returned from functions, or passed into functions as arguments. Common built-in functions like map() and filter() apply functions across iterable objects.