RAML (RESTful API Modeling Language) is a specification that helps manage the entire API lifecycle from design to development to sharing. It provides all the information needed to describe an API. The API Designer tool allows users to design REST APIs using RAML and test them using a mock service without writing any code. The document demonstrates how to create a basic RAML file for a sample API using the API Designer, including adding resources, methods like GET and POST, and custom headers.