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Molecular function describes activities, such as catalytic or binding activities, that occur at the molecular level. GO molecular function terms represent activities rather than the entities (molecules or complexes) that perform the actions, and do not specify where or when, or in what context, the action takes place. Molecular functions generally correspond to activities that can be performed by individual gene products, but some activities are performed by assembled complexes of gene products. Examples of broad functional terms are catalytic activity, transporter activity, or binding; examples of narrower functional terms are adenylate cyclase activity or Toll receptor binding.
It is easy to confuse a gene product name with its molecular function, and for that reason many GO molecular functions are appended with the word "activity". The documentation on gene products explains this confusion in more depth. The on the function ontology explains more about GO functions and the rules governing them.