Halliday & Matthiessen (1999: 26 , 28):
In traditional grammar, only certain grammatical categories were taken into consideration; these categories were (i) overt and (ii) word-based. In particular, inflectional categories of the word such as tense, case, and number were described and then interpreted semantically. In a functional grammar, while such categories are not ignored, they tend to play a less significant role, appearing at the end point of realisational chains.
For instance, it is not possible to base a functional interpretation of number in English simply on the presence or absence of 'plural' as a nominal suffix (as in grammar+s); the category of number is rather more complex, involving two complementary systems (see Halliday, 1985: 161-2).
Similarly, the general properties of the construal of time embodied in the English tense system are not revealed by only looking at the overt suffixal past tense marker- (as in laugh+ed); again the scope of the semantics of tense in English is far greater than this oven word category would suggest (see Halliday, 1985: 182-4; Matthiessen, 1996). In general our move into semantics from grammar differs from the traditional one along the following lines.
(i) We consider not only overt categories but also covert ones. …
(ii) The gateway to semantics is the clause rather than the word.