Josh Comeau explores the integration of Netlify Functions with Gatsby Cloud, highlighting the benefits of using serverless functions for small-scale backend tasks without the need for a full server setup. In his personal blog project, hosted on Netlify and built with Gatsby Cloud, Comeau demonstrates how serverless functions can efficiently handle tasks like tracking article likes and hits. He explains that while Gatsby Cloud is primarily a CI service for building and distributing Gatsby apps, it requires some additional steps to ensure Netlify can package and ship the functions. By utilizing Gatsby's build hooks and Netlify's "zip-it-and-ship-it" module, developers can effectively prepare and deploy serverless functions within a Gatsby Cloud environment. This integration allows for seamless function execution and deployment, with the added benefit of Netlify's user-friendly interface and favorable pricing model.