The term 'serverless architecture' refers to a cloud computing model where the cloud provider dynamically manages the allocation of server resources. In this setup, developers can build and run applications without needing to explicitly manage the underlying infrastructure. This allows for automatic scaling and installation of application components based on demand. This architecture results in lower operational costs and increased focus on writing code rather than infrastructure management, as the provider handles server maintenance, security, and scaling automatically. It’s particularly beneficial for applications with variable workloads.