A Functional Interface is an interface that contains only one abstract method, but may contain any number of default or static methods. Is used extensively in Java 8 and later versions to enable the use of lambda expressions and method references. Denoted with the @FunctionalInterface annotation, which is optional but recommended. The annotation helps to ensure that the interface only has one abstract method, as it will cause a compilation error if more than one abstract method is added.
Functional interfaces can be used in many situations where a single method is needed, such as event handling, concurrency, and functional programming. They provide a clean and concise way to define and use behavior that can be passed around as a parameter or returned as a result.