In Python, a lambda function is defined as an anonymous function expressed as 'lambda parameters: expression'. Option 'A' is correct because it properly creates a tuple from its parameters 'x' and 'y'. Option 'C' is also correct because the expression 'x//y - x%y' is valid and returns the result of integer division of 'x' and 'y' minus the remainder of 'x' divided by 'y'. Option 'B' is incorrect because 'return' cannot be used in a lambda function. Option 'D' is incorrect because the syntax is invalid for lambda functions.