It’s mostly an ergonomic difference.

Google Sheets has custom functions in Javascript; excel has them in VBScript. Both are part of the 'product', but they’re not integrated into the spreadsheet user interface at all. Using them is more like writing an extension to the Excel/Google Docs app, than it is like editing a document.

To define a custom function you need to leave the spreadsheet UI and define it in a totally different programming language. It’s a major barrier to entry that most users don’t cross, and the context-switching is a hassle even if you’re comfortable with both.

Lambdas let you write a function that takes arguments in the same way you would write a formula that references other cells.