Serverless architecture lets developers build event-driven backend systems without managing infrastructure, with the cloud provider handling provisioning and scaling. Functions execute on demand rather than running continuously, which changes cost dynamics: low or bursty traffic is cheaper than always-on servers, but high steady traffic can become more expensive. Key trade-offs include cold start latency, stateless design constraints, execution time limits, and vendor lock-in risks. Serverless is a strong fit for unpredictable traffic, event pipelines, scheduled jobs, and small teams moving fast. It's a poor fit for consistently high traffic, latency-sensitive workloads, long-running tasks, or persistent connections. The post includes a practical AWS Lambda + DynamoDB code example and covers common mistakes like treating functions as stateful servers and skipping monitoring.