1. FUNCTION returns only the name of the function
2. METHOD returns the name of the class along with the name of the function

Example:

class Slightbook
{
   function doit()
    {
       echo __FUNCTION__;
    }
   function doitagain()
    {
       echo __METHOD__;
    }
}

$obj=new tricks();
$obj->doit();
output will be ---- doit
$obj->doitagain();
output will be ----- tricks::doitagain