This is the foundation which provides the plug-in framework available in Studio 2019, used by other APIs to define extension points inside the software. As well as the plug-in framework, this API also provides the engine besides the settings mechanism you find inside Studio.
In order to translate content from a certain file type, Studio extracts it into an SDLXliff. If you want to work with an unsupported file type that isn't already available with Studio 2019, you can use this API to extract the content and create the SDLXliff needed for translation.
There are many activities that must be done as part of the translation process and which is why Studio provides project management features such as analysis, pre-translation and more. Using the Project Automation API you can build a customized translation workflow based on activities specific to your needs.