A serverless application is not just a Lambda function, it can include many more services such as:
Front end code and assets hosted by S3 and CloudFront
API endpoint - API Gateway
Compute - Lambda
Database - DynamoDB
Event sources, permissions and more…
The SAM group of products and features within AWS has 2 main parts:
AWS SAM template specification, which is an extension of CloudFormation. Adds components to CloudFormation templates designed specifically for serverless applications: Transforms, Globals & Resources (can include normal CFN resources as well as SAM specific ones)
AWS SAM CLI allows local testing, local invocation and deployments into AWS