It's a ridiculous phrase and helps perpetuate the myth that the alcoholic lives under a bridge drinking cheap liquor out of a brown paper bag...the last thing an alcoholic needs is re-enforcement of an already huge ego by insinuating that because they hold down a job and a roof over their head that they are somehow different to the average alcoholic and unique...
One often finds that it is not the alcoholic themselves who call themselves functional but family, friends and some medical "professionals"...
If ever there was an oxymoron - functional drunk!