What it means
With function calling, a developer describes functions the model may use, such as "get_order_status(order_id)". When a user asks a question that needs one, the model returns the function name and inputs in a structured format instead of a plain answer. The application runs the function and gives the result back to the model, which then answers.
The term is often used interchangeably with tool calling, which is the more general name used by many providers and by MCP.
Why it matters for a business
Function calling is what connects AI to real data and actions. It keeps the model from guessing: instead of inventing an order status, it asks your system for the real one.
A business example
Things to watch
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Validate inputs before running a function.
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Limit which functions can change data.
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Log calls for debugging and audits.