For a similar take on this subject you can check out http://www.theptdc.com/2012/08/the-death-of-functional-in-personal-training/, but I wanted to put my own take down on the subject just for the hell of it.
When the word functional was used in my training manual, it was essentially used as a synonym for 'corrective exercise', another big buzzword in the industry today. The goal of corrective exercise (and functional exercise, in this sense) is to correct postural deviations caused by muscular imbalances through a combination of strengthening and stretching. As I was taught, functional exercise is anything that therefore involves the restoration of function in relation to these imbalances, by restoring posture/gait mechanisms and thus improving the client's capacity for basic movement and everyday activity. Sounds simple, right?
In that context, it is, but the problem is that 'functional' as a word is used and abused for so many other purposes that it has lost all meaning. That loss of meaning, in turn, means that the word can be used for all sorts of different and ultimately contradictory purposes. 'Functional' becomes the keyword of choice for all kinds of unsavory types, mostly keyboard warriors trolling on youtube videos. A 1000-pound squat? That's not functional! When do you do that in real life, huh? Deadlifting a car? That's not functional! When do you use that in real life, huh?
The point is that 'functional' ends up used from the perspective of literally anyone not interested in your particular sport to downplay your achievements. Feats of strength, endurance, speed, and agility are all downplayed in favor of whatever exercise regimen the 'functional' warrior prefers, which often includes hefty amounts of bodyweight exercises or goofy generalized fitness routines not geared for performance. These routines may be good for rehab but not much else. Essentially, functional warriors are like crossfitters minus everything that makes a crossfitter good, aka, a dedicated effort to improve oneself.
I'm going to make the same point that the above article makes, and I'm going to put it in all caps so that readers can understand how important it is: THE FUNCTIONALITY OF ANY EXERCISE IS CONTEXT DEPENDENT. There is no such thing as an exercise that is good for every exerciser in every situation. Some exercisers have previous injuries to work around, or preexisting conditions which change their ability to exercise. Everyone has different goals. For many, it's just weight loss. For athletes, it can be virtually anything, based on what sport you're competing in. Methods of training that are good for boxers are not going to be good for strongmen and vice versa. Whether or not an exercise is right for you isn't based on any universal maxim of 'functionality' but rather on whether or not that exercise is appropriate for your specific fitness goals. It's the duty of a trainer, ultimately, to help you understand which exercises are (and aren't) right for you.
I'm mostly bringing this up because it's an excellent lead-in to a discussion of value theory. Value theory is based around the idea that human beings orient their lives around basic values which determine which things they find important and which they ignore. It's important to understand that these values literally shape our perception of the world. For example, imagine an event to which two people were witness. Each would focus on different details of the event that most mattered to them; what most drew the eye, what was most interesting, etc. If you were to try and get an account of the event, you would get two very different stories because they experienced that same event very differently. Now imagine that there aren't two, but rather two hundred people. You're going to get a lot of different accounts of what happened. Of course, there's going to be common agreement on some important facts, such as the actual existence of the event and some basic characteristics of its occurrence, but each will speak from their own point of view, which will mean a variety of opinions on smaller details. These may seem like minor differences, but it's hard to understate exactly how much this sort of selection affects our opinions. Another well-known tendency is confirmation bias: we tend to seek to confirm beliefs we already hold rather than accepting contradictory evidence because this is easier than changing our values. When paired with our ability to literally change our interpretation of the world, the end result is that people will often interpret events in ways most likely to support their own ideological beliefs.
Another important aspect of value theory is its application to barriers in our outer world. In short, we do not find barriers to our progress in the various features of the earth, but instead create them by an act of willful synthesis. Imagine an explorer traveling west across the United States, coming suddenly to a massive mountain range. The mountains appear as an obstacle to him, an already existing obstacle in the way of his progress. But in reality, it is he who has created the mountains as an obstacle, by making himself the sort of person to whom a mountain would be an obstacle, namely, an explorer. If he had chosen instead to be a doctor, for example, and remain in his hometown, then he would never have come into contact with the mountain and would never find it a barrier (though he would in the process constitute other barriers, such as the incurable patient, etc.). It is a person's values that not only construct how we view the outside world, but also how the outside world stands above and against us. In looking for the mountain as barrier, this is precisely how we find it. Were we not interested in the mountain, it would be a non-entity, unimportant, not a hindrance in the slightest. It is only by taking specific orientations towards the world that we open up the way for that world to resist us.
The important thing to be drawn from this is that every human action is context-dependent. Actions and objects only have meanings and value to people who are already dedicated to being caught up within that value, that is to say, people who are already interested in that value. A gun, for example, is no more capable of killing than a knife is, if used incorrectly. The reason the gun is superior is not because it is necessarily better at killing (you can't kill someone 'deader', and a person dead from a knife wound is just as dead as someone from a gun wound), but because it can be used easily and effectively in a variety of situations and is therefore more likely to be contextually relevant. If, for example, a man with a knife lay in hiding to assassinate a woman with a gun, he would have a much better chance at survival in combat because he has arranged the situation to be more contextually beneficial to his knife use than to the woman's gun use.
It's the same way with lifting and with exercise of any sort. A feat of strength is only relevant if you see it as a feat to be respected. A weight is only heavy if you constitute yourself as a person looking to lift it. Otherwise, it's just a dead weight, devoid of meaning, 'function'less. An exercise is 'functional' only if it's relevant to whatever goals the exerciser has in mind. This means that not only is 'functional' context-dependent, but also that it is incapable of being generalized. There is no exercise, for example, that is useful in some situations but is also useful in all situations, as this would be a logical redundancy. And if 'functional' as an exercise concept is incapable of being generalized, that means that you have literally zero right whatsoever to ever use it outside of contextual situations. You can describe an exercise as 'functional' with relation to a specific sport, for example, or in relation to basic movements of everyday life, but you can't use it as a general critical term.
The point that's probably most infuriating about the everyday life version of the functional argument is that there is literally no situation in which any exercise is 'functional' with relation to everyday life. If you're seriously exercising for any reason, you're going beyond the basic requirements of physical life. Chances are you live in a developed country with access to modern technology and social systems, which is to say that you could go your entire life without exercising or having to ever lift a heavy weight, and obviously quite a lot of people do. There is almost literally no such thing as a functional exercise for everyday living, in that aside from the general health benefits and improved posture, there's almost no reason to care about strength, endurance, aesthetics, etc. No exercise is functional because every exercise is functional, in this sense: 'functional' is an empty descriptor without any actual meaning.
You want to know what functional looks like? Go look at pictures of tribal societies. Are any of those guys huge? Are any of them super strong? Are any of them capable of running marathons? Yes, maybe, but not because it's required of them in the wild. Even the harshest of living conditions, the basic hunter-gatherer society, has no real major performance demands on the human body. If you're training for any kind of performance, functional is meaningless.