Beta reduction
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A beta reduction (also written β reduction) is where you actually apply a lambda function to an expression to generate a result.
For example, suppose we have
(\x y -> 2*x*x + y) 7
If we now replace every occurance of x with 7, we arrive at
\y -> 2*7*7 + y
We have thus performed a beta reduction.
Also see Lambda calculus and the wikipedia lambda calculus article.