What do objects encapsulate in Python?

In Python, objects encapsulate both variables and functions, which is a fundamental concept of object-oriented programming. This encapsulation allows for the bundling of data (attributes) and the methods (functions) that operate on that data within a single logical unit, referred to as a class.

When you create a class in Python, you typically define attributes (which can be thought of as the properties or state of the object) and methods (which are the functions that define the behavior of the object). For instance, if you have a class representing a "Car," it might contain attributes such as "color" and "model" (variables), and methods like "drive()" and "brake()" (functions).

This combination of data and behavior is a powerful feature of object-oriented design, enabling better organization, code reuse, and encapsulation which enhances maintainability and clarity in programming. Thus, the correct answer reflects the comprehensive nature of what objects contain, making it clear that both variables and functions are integral parts of an object in Python.