[0. On mailing lists, 'lambda expression' is used rather than 'lambda form'. Docs use both. Consistency across docs is a broader issue than this one. So leave title alone for this one.]

1. (first sentence) "By popular demand, a few features commonly found in functional programming languages like Lisp have been added to Python." (in early Python 1!) I think this should just be deleted. See 4. below as a replacement.

2. " With the lambda keyword, small anonymous functions can be created."
Change to
"Small anonymous functions can be created with the lambda keyword."

3. change "Here’s a function that returns" to "This function returns"

3.5 add a sentence about the different between def and lambda (the name attribute.

4. Add sentences about the purposes of lambda. Add an example that illustrates passing functions. 

>>> pairs = [(1, 'one'), (2, 'two'), (3, 'three'), (4, 'four')]
>>> pairs.sort(key=lambda pair: pair[1])
>>> pairs
[(4, 'four'), (1, 'one'), (3, 'three'), (2, 'two')]

New changeset d4eb47c3d681 by Georg Brandl in branch '2.7':
Closes #18646: improve lambda docs in tutorial.  Original patch by Terry Reedy.
http://hg.python.org/cpython/rev/d4eb47c3d681

New changeset ef1a17d5e263 by Georg Brandl in branch '3.3':
Closes #18646: improve lambda docs in tutorial.  Original patch by Terry Reedy.
http://hg.python.org/cpython/rev/ef1a17d5e263

Thanks for the patch; I modified it a little (removed the sentence about the name attribute; this is too involved for the tutorial, and used "lambda expression").  Will fix more "lambda form" in the docs in another changeset.

I think this was a nice improvement.