An API defines what you can call, what inputs are accepted, and what comes back. When your app asks Stripe to create a checkout session or asks your backend for a user profile, it is using an API. Good APIs are predictable: clear endpoints, clear request shape, clear response shape, and useful errors.
ELI5
Think of API as a named building block in a big LEGO app. A contract that lets one program ask another program for data or actions.
In practice
Use it when you are mapping how the app is structured or explaining a feature to a teammate or agent. In practice, define the owner, input, output, and failure mode before you rely on it.