An API gateway is a server that acts as an entry point for clients to access various services in a system. It manages requests from users, directing them to the appropriate backend services while handling tasks like authentication, load balancing, and caching. This simplifies the interaction between clients and multiple services. By using an API gateway, developers can streamline their applications, making it easier to manage and scale services. It also enhances security by providing a single point for implementing security measures, such as rate limiting and data encryption, ensuring that only authorized users can access the services.