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API is a way to expose a feature or component or system or even a platform to outside world. This also provides a way for external systems to access in automated ways. Whenever i develop something, I always try to think in terms of API. This approach helps in eliminating lot of bad design and code, coz once we think in terms how external entities will use it, we try all sorts of usage and thus helping the code to be more usable and robust.

The following article is a nice one which talks about API design.