The application creates a mock Twilio Lookup API to simulate external API responses during development, allowing developers to test and integrate third-party services without incurring costs or maintenance downtime. The application uses PHP's Slim framework, Google's phone number library, and a custom `Lookup` class to return mock data, which can be used to test the integration of the Twilio Lookup API. The application is bootstrapped with a single route that receives a phone number as input and returns the mock data in JSON format. The application can be tested using PHP's built-in web server or tools like curl or Postman.