The programming paradigm that focuses on the use of functions and avoids changing states is known as functional programming. In this paradigm, computations are performed through the evaluation of functions rather than executing sequential commands. It emphasizes immutability and higher-order functions, which can accept other functions as arguments or return them. By minimizing side effects and mutable state, functional programming enhances code modularity, reduces bugs, and improves maintainability, making it an attractive choice for developing robust and scalable software systems.