It is the functional unit of lungs:

Explanation

The functional unit of the lungs is called the "alveolus" (plural: alveoli). Alveoli are tiny, air-filled sacs located at the ends of the respiratory bronchioles in the lungs. These sacs are where the exchange of oxygen and carbon dioxide takes place between the air in the lungs and the blood in the surrounding capillaries. This exchange of gases is essential for respiration, where oxygen is taken up by the bloodstream and carbon dioxide, a waste product, is released from the bloodstream into the lungs to be exhaled. The large surface area and thin walls of the alveoli facilitate efficient gas exchange.