Scientifically, given that we are just pieces of universe (earth), then parts of the universe can experience phenomenal consciousness.
"Panpsychism" says that therefore phenomenality must be inherent to (or at least ubiquitous in) what the universe is made of at some fundamental level. This can bring to mind absurd anthropomorphic ideas of particles or fields experiencing complex things, but sometimes it's referred to as pan proto-psychism. Bertrand Russell apparently held some version of the above though it seems it fell out of favour, but has had a mild renewal of interest (Goff etc)? But has "combination problem" and "binding problem" etc etc.
Whereas functionalism only commits to certain functional arrangements of matter being phenomenally conscious. Often based on billions of years of evolution-by-natural-replication-and-selection having created new complexity. But can also include simple switches having some unit of consciousness, which I think the physicist Michio Kaku holds to.
But firstly it seems that the function of something can only be defined by reference to a wider context. Either the evolutionary past (which in an eternalist block universe also exists, though I don't know if that's relevant) or for example the outside of the skull as well as the inside. I don't mean to get into brains in vats etc. But just, if say a function is to react to light hitting the eye, to then guide behaviour, somehow the brain knows that's its function, because it has qualia of say a green object out there.
Even though that function is not inherent to that pattern of electrochemical neural activity, but only to the whole context (inter not just intra). See also philosopher of biology McShea on how at any moment we are guided by our environment just as much as we guide to our own ends. For example just as a torpedo locks onto a ship, the ship is guiding the torpedo. He gives a number of non-organic examples which make the same point, which also highlight that the apparent teleology of evolution can be found nonorganically too, because ultimately it's all the same physical stuff.
Therefore, how do "functions" not go down to the micro or quantum level like panpsychism?
[Edit by another person: Or, put another way, if teleological notions of biological functionality are so hard to paraphrase away, then does functionalism become panpsychism in the limit, or is there a way to block such a transformation?]