Functional specifications are detailed documents that outline the specific requirements and functionalities of a system or product. They serve as a guide for developers and stakeholders, ensuring everyone understands what the system should do. This includes user interactions, data handling, and performance criteria, helping to align expectations and reduce misunderstandings. These specifications are crucial in the software development process, as they provide a clear framework for design and implementation. By defining the desired features and behaviors, functional specifications help teams create a product that meets user needs and business goals, ultimately leading to a more successful outcome.