API documentation is important for providing information about your Web API's endpoints, request/response models, and available functionality. In ASP.NET Core Web API, you can implement API documentation using tools like Swagger (OpenAPI) or NSwag. These tools generate interactive documentation based on your API's code and annotations. By configuring the Swagger middleware and adding XML comments to your API code, you can generate comprehensive and user-friendly documentation. The generated documentation can be accessed via a web interface, allowing developers to explore and understand your API's capabilities and usage.