In software engineering, functional requirements are the specific behaviors or functions of a system – essentially, what the system is supposed to do. They outline how the software should interact with users, other systems, and its own components. Let's break it down a bit more:

Understanding Functional Requirements:

1. Core Functions: These are the primary operations and activities that a software system must perform. For example, in a photo editing app, core functions might include uploading photos, applying filters, and saving edited images.

2. User Interactions: This covers how users interact with the system. For a shopping website, this could be searching for products, adding items to a cart, and checking out.

3. Data Processing: Functional requirements specify how data should be processed, saved, or retrieved. For instance, a banking application would have functional requirements around calculating interest or processing transactions.

4. Business Rules: These are the rules or logic the system uses to handle and manipulate data. For example, a functional requirement could be that the system automatically adds a discount to orders over $100.

5. Compliance: In some cases, functional requirements include compliance with standards or regulations relevant to the system’s purpose.

6. Performance: While often considered a non-functional requirement, certain performance benchmarks (like processing a specific number of transactions per second) can be part of functional requirements.

Examples of Functional Requirements:

• Authentication: Users must be able to log in to their account using a username and password.
• Report Generation: The system should generate monthly sales reports.
• Email Notifications: Users receive an email notification when their order is shipped.
• Data Export: The system allows users to export their data in CSV format.

Documenting Functional Requirements:

• Detail and Clarity: Functional requirements should be detailed and clear enough for developers to implement and testers to verify.
• User Stories and Use Cases: They are often documented as user stories in Agile methodologies or as use cases in more traditional development models.

Importance in Software Development:

• Guide Development: They provide developers with a clear understanding of what needs to be built.
• Basis for Testing: Testers use functional requirements to determine what aspects of the software to test.
• Stakeholder Communication: They help communicate to stakeholders what the system will be capable of doing.

In summary, functional requirements define the specific operations, actions, and activities a software system must be able to perform. They form the basis of what developers build and what testers validate, ensuring the final product meets the users' and stakeholders' needs.