An Application Programming Interface (API) is a frame of reference that allows third-party developers to produce sites or applications that draw on data provided by other sites.

Examples of this are Google Maps, Microsoft local.live.com and Flickr. These allow you to embed maps or photos on your own site and overlay your own data and adding value for your visitors. XML APIs are the roots of interconnected webservices and the "programmable web" / "web as a platform" - wikipedia