It's a cover up, sometimes.
I think it's a useful phrase if it's the first step to acknowledging the truth, though, as long as it's not the only step.
Besides, any alcoholic considered a "functional alcoholic" will lose any semblance of functional if they don't get help soon enough.
I know when it came to my A, I was on the fence until I learned that some people were called "functional alcoholics". Once I accepted that term, and made the first leap to the conclusion that yes he was a kind of alcoholic, it wasn't long until I accepted the full truth of the situation. (He still hasn't, even though he's gone to rehab "for me" and has admitted he has an "alcohol problem," but that's his problem, not mine.)