Where it shines
Spiky, event-driven work: image processing, webhooks, scheduled tasks. You pay for execution rather than idle capacity, and scaling is somebody else's problem.
Where it hurts
Long-running requests, heavy dependencies and anything needing a persistent connection. Cold starts and connection limits against a traditional database are the usual surprises.
The hybrid that usually wins
A conventional application for the site, with functions for bursty background work. Small teams rarely benefit from making everything one or the other.