Template functions are a feature in programming languages like C++ that allow developers to create functions that can operate with different data types without needing to write multiple versions of the same function. By using templates, a single function definition can be used for various types, making the code more flexible and reusable. When a template function is called, the compiler generates a specific version of the function for the data type used in that call. This process is known as "template instantiation." Template functions help reduce code duplication and improve maintainability, as changes to the function only need to be made in one place.