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The term that describes the functional units responsible for urine formation in the kidneys is nephrons. Nephrons are microscopic structures within the kidneys that play a crucial role in filtering blood, reabsorbing necessary substances, and excreting waste products as urine. Each kidney contains approximately a million nephrons, which work together to regulate water and electrolyte balance, as well as to remove metabolic waste from the bloodstream.

The first option, glomeruli, refers to the network of tiny capillaries located within each nephron where blood filtration occurs, but they are just a part of the nephron structure rather than the entire functional unit. Medullary pyramids are regions of the kidney that contain the renal tubules and collecting ducts of the nephrons, but they don’t represent the functional units of urine formation in isolation. The term renal corpuscles refers to a component of the nephron that includes the glomerulus and Bowman's capsule, but again, this is just part of the larger nephron structure. Hence, the term nephrons encompasses the entire functional unit that is responsible for urine formation.