An API gateway is a crucial component in microservice architectures, acting as a management tool that sits between users and backend services to simplify communication and improve performance, security, and management. It serves as a reverse proxy, handling API requests, routing them to appropriate backend services, and returning aggregated responses, thus enabling seamless updates and retirements of microservices without disrupting user experience. API gateways offer benefits such as rate limiting to prevent DDoS attacks, protocol translation, cached responses to reduce latency, and enhanced security by acting as a gatekeeper. However, they also come with considerations like being a single point of failure and potentially complicating routing logic. Combining API gateways with serverless platforms, like Koyeb, further enhances efficiency by maximizing cloud resource use and offering features such as built-in service mesh and discovery, which facilitates encrypted inter-service communication and automatic scaling without configuration.