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Short answer : lambda is used to create short and anonymous Python functions. For example, instead of writing:

sage: def inc(n):
....:     return n+1

You can write:

 sage: inc = lambda x : x+1

but lambda x : x+1 can be used directly in your code, without needing to name it inc, while the def construction require to give a name and use return

Longer answer : http://www.sagemath.org/doc/thematic_tutorials/functional_programming.html