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It can be used in a couple of different ways. If you put it at the end of your workflow, you'll see some data in your message. If you then publish that workflow to the gallery and call it with the Gallery API, you'll see that the data is presented in a different way to the other tools.
Originally it was designed to be used with the Main Alteryx API (AlteryxEngineDLL), however it possibly has a wider purpose now presenting data to a REST API.
Note: In case there is confusion, It is an API Output Tool, not an API Creation Tool, so it will not serve as an API, however can provide the data that an API needs.
The API Output tool provides the records that are being streamed in to the tool, as well as the record headers, as Alteryx Engine "Message" types.
Once you run the workflow, if you look at the messages output, you will see all of the records listed, each as its' own unique message line item.
If using the Alteryx Engine API to programatically execute workflows, detailed here: C:\Program Files\Alteryx\APIs\AlteryxSDK.zip\Documentation\AlteryxSDK.chm, one can run a module and use a message callback to retrieve messages that are being produced by the workflow.
Callback information can be seen in the file listed above, under Alteryx Engine/Alteryx Engine
Since the API Output Tool creates "messages" of the data, you can use the Alteryx Engine API to programatically retrieve information from the workflow.