An API needs to be user friendly, secure, documented, versioned, and handle failures gracefully to be considered great. The document discusses how APIs have evolved from monolithic applications to microservices that decompose functionality. It also covers best practices for API design like using RESTful principles, supporting different interaction patterns, handling dates and errors properly, and using authentication standards like OAuth. Versioning approaches and ensuring APIs are well documented and fail gracefully are also emphasized as important characteristics of a great API.