The Netlify Lambda Vue CLI plugin simplifies the process of working with serverless functions in Vue.js projects by integrating it into the existing developer workflow. The plugin uses the Netlify Lambda CLI tool and a service plugin to build and run serverless functions locally for testing and preparation for deployment, making it easier for developers to start using serverless functions without complicated configurations. The plugin is designed to work seamlessly with the default build and serve commands in Vue CLI, allowing developers to focus on building and deploying their applications with more confidence and clarity.