Serverless architecture refers to a cloud computing execution model where the cloud provider dynamically manages the allocation of resources. Developers build applications without having to manage the underlying servers, allowing them to focus on writing code and deploying features. This model enables automatic scaling in response to user demand and typically operates on a pay-as-you-go basis, where users are charged only for the compute time consumed. Serverless architecture simplifies deployment and maintenance, enhancing agility in application development.