An API (application programming interface) is a set of rules two software systems use to send and read data from each other. Instead of a person manually copying information from one tool to another, an API lets systems exchange it themselves - in a structured way, without the errors that come from retyping things.
In practice, this means an online store, accounting system, payment gateway or even an AI agent can reach into your business system through the API - read the status of a job, create a new record, update a contact. An API works both ways: a system can provide data (answering requests) as well as receive it (processing incoming requests via a webhook).
For a non-technical user, the important thing is simple: a good API means your business system isn't a closed island - it can be connected to other tools your company uses or will use.
Related: Webhooks and API: how to connect an online store or website to your system, What is a webhook, What is MCP, Webhooks and API.