Performance monitoring, or Response Time monitoring is the monitoring of your API's response time, and comparing each result against a percentile.
Good monitoring tools give you the ability to monitor your most used API endpoints. You could then see your best and worst performing endpoints, and optimise them. You could also optionally trigger alerts if a query starts performing intolerably slow.
Why should you care?
Performance and Response time monitoring can help your team understand which APIs need more love, but also watching response times can help diagnose minor issues before they become full-blown outage incidents.