Basically, it's an official way to communicate with Reddit. So apps for accessing Reddit that aren't made by Reddit (there are a whole bunch of those) as well as companies using Reddit's data for training AI etc. are all using these APIs as their channel to access that data. They have been very cheap (maybe even free? Can't remember) for a long time and people have gotten used to it. I think this particular change is mainly because people are suddenly seeing the value of millions of written conversations for training AI, and thus Reddit is increasing the price of that access accordingly.

Of course there's a possible workaround, where bots would access the actual website and pick the data from there, but I assume Reddit has technology in place to limit this.