The functional unit of the kidney is the nephron. The nephron is a microscopic structure within the kidney that performs the essential functions of the organ. It consists of a filtering component called the glomerulus, which is responsible for removing waste products from the blood. The glomerulus is connected to a system of tubules, which reabsorb useful substances such as water, electrolytes, and glucose back into the bloodstream, while allowing waste products to continue towards the bladder. The nephron also plays a role in regulating the body`s fluid and electrolyte balance through processes like filtration, reabsorption, and secretion. Therefore, option 3, nephron is the correct answer.