The resulting value can be anything you want. You can turn a list into a tree, or another list.

Bad example:

    reduce(lambda x,y: x+x.extend([y+2,y*2,y**2]), [1,2,3,4], [])

It's a reduction in the sense of a transformation (also often seen in complexity theory), not in the "this makes this smaller" everyday usage that I think about first.

I suppose it's just so ... reductive, you know?