Short remark: Please don't call your list list. It overrides the python list method an can lead to some confusing error messages
You can apply the lambda function by using map to see what it does:
In [9]: your_list = [ (1,4), (0,8), (5,6), (7,10) ]
In [11]: list(map(lambda x: x[1], your_list))
Out[11]: [4, 8, 6, 10]
So for each tuple inside your list it takes the second elements (counting starts at 0). When you call sorted it then sorts this elements reorders the tuples accordingly.
In your cases the output of the lambda is already sorted correctly, so the sorted functions does not need to reorder anything
In [13]: sorted(your_list, key = lambda x: x[1], reverse = False)
Out[13]: [(1, 4), (5, 6), (0, 8), (7, 10)]
If you had initialized your_list in a different order you would still get the same result
In [14]: your_list = [ (0,8), (1,4), (7,10), (5,6) ]
In [15]: sorted(your_list, key = lambda x: x[1], reverse = False)
Out[15]: [(1, 4), (5, 6), (0, 8), (7, 10)]