Truth-functional refers to a type of logical operation in propositional logic where the truth value of a compound statement is determined solely by the truth values of its component statements. This concept plays a crucial role in understanding how logical connectives, such as 'and', 'or', and 'not', operate, allowing us to analyze the relationships between propositions based on their truth values. Recognizing that truth-functional operators work independently of the meanings of the individual statements helps clarify the limits and potential extensions of propositional logic.