Serverless computing is a method of providing backend services on an as-used basis. A serverless provider allows users to write and deploy code without the hassle of worrying about the underlying infrastructure. A company that gets backend services from a serverless vendor is charged based on their computation and do not have to reserve and pay for a fixed amount of bandwidth or number of servers, as the service is auto-scaling. Note that despite the name serverless, physical servers are still used but developers do not need to be aware of them.

Source: Cloudflare