An API (Application Programming Interface) is an interface that enables different software applications to communicate and exchange data. APIs define how requests are made and responses are handled without exposing the internal workings of the respective application. They provide a standardized way to access functions and databases, such as integrating payment services or social media features into a website. There are various types of APIs, including RESTful APIs, SOAP APIs, and GraphQL APIs, which are used depending on the use case. APIs play a crucial role in modern software development by enabling interoperability and scalability of applications.