The answer is that Cloud Functions and AppEngine fulfill different use cases. There's clearly room for both.
There is definitely room for many kinds apps in the PaaS space, including serverless as well as microservices. OP was arguing that existing platforms like GAE have been supporting serverless and can continue to do so. However, the premise of the serverless computing movement is that newer platforms (e.g. OpenWhisk, Google Cloud Functions, AWS Lambda) are better for running serverless applications than traditional PaaSes (e.g. Heroku, Bluemix, OpenShift)
(Lambdas couldn't even be triggered with HTTP calls when AWS Lambda launched.)
Google Cloud Functions is a lightweight, event-based, asynchronous compute solution that allows you to create small, single-purpose functions that respond to cloud events without the need to manage a server or a runtime environment.
Where is the reference to scripting?
"...single-purpose functions that respond to cloud events..."
They are meant to react to events within your infrastructure, rather than being public facing application endpoints.
I generally really like AWS and I use it for a ton of stuff, but I very much welcome competition and innovation in this space.
I'm a massive fan of AWS Lambda, but using it to serve public API quests is just a nightmare. Just because you _can_ do something, doesn't mean you should.
I'm constantly puzzled by why people use Lambda for this - if you don't want to deal with managing traditional services, there's plenty of other options out there (in AWS and otherwise) that are much more suited to the task of serving a website.