What is a decentralized Finance Exchange script?

Could you elaborate on what a decentralized Finance Exchange script actually entails? As a crypto enthusiast and financial practitioner, I'm curious to understand its CORE functionality and implications within the broader ecosystem. Is it a programming script that enables peer-to-peer financial transactions without a central authority? How does it differ from traditional exchange models? What are some of the key benefits and challenges associated with using such a script? I'd appreciate a concise yet comprehensive explanation of this intriguing concept.