A functional test checks whether the print does indeed what it was designed for.
Either through pinbed-contacts or connectors real operation is simulated.
On I/O level the functionality is checked.
First there is the Optical Inspection where it is made sure that all components are rightly place. This can either be a visual inspection or automated through a so called AOI scanner. AOI refers to Automated Optical Inspection.
Thirdly we perform a Functional Test by which we make sure the print functions as it should. This can be done via connectors or via a pin bed device which makes contact to dedicated contact points on the backside of the PCB.