In software development, the acronym API stands for Application Programming Interface. An API defines a set of rules and protocols for building and interacting with software applications. It allows different software programs to communicate with each other, enabling developers to access and utilize functionalities or data from other systems without having to understand their internal workings. APIs are crucial for integrating different services, facilitating third-party development, and streamlining application development. They play a vital role in the modern software ecosystem by enhancing flexibility and promoting innovation.