Lambda provides a particular challenge for Terraform. You don't normally see Terraform used as a deployment tool for containerized services, even though it could theoretically do that. But because it's the only thing close to the lambdas unless you want to introduce another third party tool, deployment ends up falling to it as well, unless you decide to choose another tool for the lambdas, like serverless or CloudFormation, and then you've got a bad build tool or a bad deployment tool for anything but the most trivial lambda builds.

And I will continue to be sad that all of the higher order first party tooling is ultimately going to be based on CloudFormation (looking at you, https://aws.amazon.com/proton/).

Ultimately, after having used Terraform to manage function code bundling/deployment and skipping Terraform completely for the lambdas, I think Terraform does best when it manages the infrastructure lifecycle for lambdas and nothing else. You can then rely on more competent tooling for deployment.