Yes, it's jargon. No, it's not just jargon for the sake of it.

Yes, this is the key. The reason technical jargon gets a bad name is when it's overused or needlessly extended. Often, 'functionality' should be crossed out and replaced by 'function' or 'use' whenever someone intelligent gets to read the manager's/salesperson's first draft. (This seldom ever happens.) But there is a good niche for the word when it's genuinely needed.