It's not a matter of absolute need; it's a matter of shortening functions. For example, say I have a list of username and number of posts:

  users = [["user1", 500], ["n00b", 15], ["thebestuser", 177]]

I want to sort the users according to number of posts. The sorted() function takes a parameter key=, you can do it this way without lambda:

  def get_users_by_posts():

     def get_post_count(user):
        return user[1]

     return sorted(users, key=get_post_count)

The lambda implementation is a one-liner:

  def get_users_by_posts():
     return sorted(users, key=lambda u : u[1])

Well, technically a twoliner, unless you use lambda more aggressively than most people:

  get_users_by_posts = lambda : sorted(users, key=lambda u : u[1])

In general, you can always expand your lambda's into def's, but it can make your code longer and pollute the code with named functions that do trivial things.