Edge AI functions in IoT applications by processing data closer to the source, rather than relying solely on cloud computing. This allows for lower latency, real-time decision-making, and reduced bandwidth usage. Devices equipped with Edge AI can analyze data locally, enabling quicker responses to critical situations, such as in autonomous vehicles or smart factories. Furthermore, edge computing enhances data privacy by minimizing data transmission to centralized servers. This architecture supports efficient resource usage while maintaining system responsiveness and scalability in the ever-evolving landscape of IoT technologies.