How is it different from Google App Engine? Conceptually the two seem very similar to me, that is, developers do not have to worry about the underling infrastructure at all---just write code and deploy.
As a tldr, not-quite-right distinction, GAE is more of a platform whereas Lambda is more of a service.
I feel that GAE is a much more generalized solution for building/deploying applications, e.g. it's very integrated with BigTable and has caching/cron/queuing support. To a point you do not have to worry about the infrastructure, but write any GAE app at scale and soon you'll run into questions of caching some content and optimizing DB writes.
Whereas Lambda, at least right now, is a more specific use case: respond to an event by running some code. It's too early to tell whether managing Lambda functions will require fine-tuning the "advanced settings" (in all honesty it probably will) but it seems like it's much simpler.
