The first and main difference between them is that with most APIs there’s a request followed by a response. No request is required for a webhook, it just sends the data when it’s available.
The API is an interface to your data on example.com. The API is used
from your server to the example.com platform and can be used to List,
Create, Edit or Delete items.
Webhooks are automated calls from example.com to your server triggered
when a specific event happens in example.com. For example, when a task
is completed and you want to know about it in real time we'll make a
POST request to the URL you have registered for the EVENT.COMPLETED
webhook in your example account.
So, in a nutshell: The API is where you tell example.com things and Webhooks is
where example.com tell you things.
Looking more in depth:
SaaS is a concept - the idea of Software that exists in the cloud and
the client is generally a browser. A SaaS application is defined by
the functions it can provide to a user (for example Salesforce
provides a database that can be used to store customer information)
the functions available are determined by the purpose of the
application (ie: CRM, Email Blaster, CMS, etc.).
An API is a way for SaaS applications to be connected with other
applications via a common communication method (ReST, SOAP, JSON,
etc). An API cannot speak directly to another API. An API can be
used by a coded application or middleware that acts as a bridge
between two API's and runs the thread of execution. For example -
both NetSuite and Salesforce have a SOAP API, but for them to
communicate - you'd want to use middleware software that can interact
with both systems and be configured to pull new contact records
through Salesforce's API and push new records to NetSuite through it's
API every hour.
Webhooks is another communication protocol for SaaS applications that
allows for communication between applications, but simply using HTTP
POSTS to control the thread of execution. Webhooks allow an
application to speak directly to one another, without using
middleware. For example - when you submit a form to WuFoo, it can be
set up to initiate an webhooks HTTP POST to another service and pass
over some field values from the form submission. Webhooks can also
be used in conjunction with an API - for example after the webhook
notifies the other application something to happened to record id X,
that application could use an API to communicate with the service to
check the new field values or modify a status of a record.
It is difficult to have an API or webhooks without having a SaaS
application. However, you can easily have a SaaS application that
doesn't use webhooks or a (public)API. Similarly, depending on the
functions of your SaaS application, you may choose to use webhooks OR