A lambda function in Python is a small, anonymous function defined using the lambda keyword. Unlike regular functions created with def, a lambda function can have any number of arguments but only a single expression, which is evaluated and returned. It is commonly used for short, simple operations where defining a full function would be unnecessary. Lambda functions are often used in functional programming with built-in functions like map(), filter(), and sorted(). For example, a lambda function that adds two numbers can be written as add = lambda x, y: x + y, and calling add(3, 5) returns 8. Another example is sorting a list of tuples based on the second element using sorted(data, key=lambda x: x[1]). Lambda functions help keep code concise and improve readability in situations where a quick, one-time function is needed.