Functional testing is a type of black-box testing that focuses on verifying if a software component or API works as expected, without considering its internal implementation. It involves creating test cases based on the specifications of the software component and testing its inputs and outputs to ensure it meets the required requirements. Functional testing can be performed manually or automated using tools like RapidAPI Testing, which provides features for automating tests in a CI/CD pipeline or scheduling them to run at different intervals. The process involves creating test cases, running tests, and viewing results, with tools like RapidAPI Testing providing detailed information about each step of the test. By performing functional testing, developers can ensure their software meets its functional requirements and provides the expected functionality to users.