The Gatsby FuncJam Challenge, extended through September 30, 2021, invites participants to create and submit a Gatsby Function, offering a chance to win prizes such as an M1 Mac Mini or Sennheiser headphones. Gatsby Functions simplify API building for Gatsby sites by allowing developers to integrate dynamic features like forms and authentication without maintaining separate infrastructure. The challenge encourages creativity and provides resources such as documentation, example repositories, and video tutorials to guide participants. Submissions will be judged on various criteria, including code quality and creativity, with all entrants receiving a limited edition sticker. The blog post also highlights practical uses of Gatsby Functions and offers additional insights and updates via the Gatsby Twitter page and a dedicated GitHub repository.