Which benefit of Azure Functions for IoT helps manage fluctuating demand?

The correct answer highlights the benefit of scalability in Azure Functions, which is crucial for managing fluctuating demand in IoT applications. Azure Functions operate based on a serverless architecture, which allows them to automatically scale up or down in response to the amount of incoming requests or workload. This means that during periods of high demand, Azure Functions can allocate additional resources to handle the increased traffic. Conversely, when demand decreases, the system can scale back, thus optimizing resource usage and costs.

This scalability is particularly important in IoT scenarios, where device data may not be predictable, and the volume of messages can vary significantly at different times. Azure Functions can respond to these changes in demand without requiring manual intervention, ensuring that IoT applications remain responsive and efficient under varying loads.

Other options do not directly address the needs for handling demand variability in the same way: enhanced security protocols focus on protecting data and devices without addressing workload handling; support for video stream processing pertains to specific data types rather than general demand management; provisioning of physical servers is not applicable in a serverless architecture as it contradicts the scalability aspect by adding fixed resource constraints.