Run the aws cloudformation package command to upload local artifacts to Amazon S3 and output a modified template is correct because the template uses Transform 'AWS::Serverless-2016-10-31' and it references local Lambda code that must be uploaded before deployment.

Run the aws cloudformation package command to upload local artifacts to Amazon S3 and output a modified template uploads your function code to an S3 bucket and returns a transformed template where local paths are replaced with S3 URIs. You then use that transformed template with a deploy command to create or update the stack.

Run the aws cloudformation compile command to base64 encode and inline the function code into the template is wrong because that command does not exist and packaging does not inline source into the template.

Run the aws cloudformation deploy command to create the stack directly from local files is incorrect because deploy does not upload local artifacts for you and it expects a template that already references S3 objects.

Run the aws serverless create-package command to embed the source file into the current template is incorrect because no such command exists in the AWS CLI or SAM CLI and SAM does not embed source directly into the template.

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