MySQL CREATE FUNCTION Syntax

You have to override your ; delimiter with something like $$ to avoid this kind of error.

After your function definition, you can set the delimiter back to ;.

This should work:

DELIMITER $$
CREATE FUNCTION F_Dist3D (x1 decimal, y1 decimal) 
RETURNS decimal
DETERMINISTIC
BEGIN 
  DECLARE dist decimal;
  SET dist = SQRT(x1 - y1);
  RETURN dist;
END$$
DELIMITER ;