It’s simply the set of functions you use to access someone else’s code, or maybe a separate module in your own code. It gets thrown around and can mean slightly different things in different contexts.
In web development it usually is referring to the interface to a web service running on a server somewhere. Say there’s a service that gives you weather. The API might tell you to send a certain request to the server to get the current temperature, or some other request to get the current precipitation.
If you download a software library it will hopefully have an API telling you how to use it. What functions exist. What data types do they expect.
Or if you’re working on a large code base at work and you want to utilize code maintained by a different team, they might have an API that tells you how to use their code.
It’s discussed so much because it’s important to have a clean, easy to use, and well documented API when you give someone else your code. This makes it easy for them to pick it up and use it.
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