This post describes the main concept for product professionals. If you work with software, chances are you've heard the term before. Understanding it is a powerful asset.
This content is based on my experience and provided for educational purposes. The thoughts expressed are my own and do not represent those of my employer.

API stands for Application Programming Interface.
Fortunately, it’s a concept you're already familiar with. You experience it whenever you order food in a restaurant.
Before we get there, let’s break down the term Application Programming Interface.
An Application is a software program.
Programming describes the act of writing instructions in software, i.e. coding.
An Interface is a means through which two things interact.
Thus, we arrive at the mighty Application Programming Interface. It is a means through which one application can programmatically interact with another application.
Software developers program interactions between applications through APIs.
Think about your favorite restaurant.
You go there to eat a delicious meal that you do not want to or simply cannot cook on your own. The restaurant provides access to its meals through a service.
How do you use it to get a delicious meal?
Learn what is available - The service provides you with a menu and a standard ordering process that describes exactly what meals are available and how to request them.
Submit your request - There is a service staff waiting for you to submit your order. Once you submit your request to the server, the server processes its and communicates the information to the chefs who begin preparing the meal. Once the meal is ready, the chefs notify the server.
Receive your meal - Shortly after, the server returns with your meal - satisfying your request.
In our analogy, the restaurant's service is an API. It is an interface that you interact with to get the meal from the restaurant. The restaurant is a complex system, but it provides an abstracted interface to make it easy and efficient for you and other customers to access its offerings.
When you dine here, you only need to know how to read the menu and submit an order. You don't need to perform the complex logistics or culinary process behind the food arriving at your table.
APIs play this same role but for machines and software. Just as we use the restaurant's service to easily complete a job (i.e. get a delicious meal) with the help of the restaurant, applications use an API to easily complete a job with the help of another application.
APIs can be used for a wide variety of jobs such as retrieving information, passing information, or triggering actions. The world of APIs is massive and diverse. Mozilla's brief list gives a preview of the wide range of jobs that APIs can solve.
Why does this matter?
Well-designed APIs have proliferated and form the backbone of an increasingly software-enabled world. They enable interactivity between applications and introduce new business and product opportunities.
As a product professional, understanding APIs enables you to start exploring how they can unlock value for your customers and business.
How a few leading companies leverage APIs:
Organizational Agility - Amazon maintains a network of APIs for its own applications. These APIs and an underlying microservices architecture enable Amazon's teams to quickly integrate systems as their offerings evolve.
API as the Product - Plaid streamlines the secure sharing of financial and banking data. Its services are provided entirely through APIs that its customers pay to use. The company has built a lucrative business providing convenient services through well-designed API products. Their APIs power key components of fintech apps like Venmo, American Express, and Coinbase.
Network Effects - Discord empowers developers to contribute to its platform with an API. Discord's active user base attracts third-party developers, the API allows developers to build useful new features and integrations, and these increase the value provided through the platform - driving adoption and attracting new users.