AWS Lambda is a serverless compute service that enables developers to run code without managing infrastructure. This video explains how Lambda automatically scales and handles operational tasks, allowing faster application development and deployment. It highlights Lambda's cost-effectiveness, as users only pay for resources used, and its ability to handle various workloads including data processing, web applications, and emerging technologies. AWS Lambda's built-in fault tolerance and security measures make it an ideal solution for turning ideas into modern, production-ready applications quickly and efficiently.