Strapi allows developers to create custom API endpoints using its powerful set of APIs, illustrated in this guide by building a custom endpoint named "posts-report." The process involves installing a new Strapi instance with pre-configured templates, generating a basic API using Strapi's command-line interface, and structuring the project with directories for controllers, routes, and services. The controllers handle client requests by executing business logic, while services house reusable functions to streamline code management. This guide demonstrates using Strapi’s Entity Service API to retrieve and format data from an article collection, emphasizing the flexibility and efficiency of Strapi's architecture. Developers can configure API accessibility either for authenticated users or publicly through the Strapi dashboard, showcasing the platform's adaptability in managing complex data structures. The tutorial concludes with options to fetch and filter data using various APIs within Strapi, underscoring its versatility for different development needs.