Well this API will enable trusted 3rd party sites to access your Google contact information without asking you to provide your login information. Have you ever been on a web-site that asked you for your Google username and password so that it can import your Gmail contact list? Did you think twice before giving out that information there.. hmm thats what millions of people online have thought to themselves "why is this new site I'm on asking me for my Gmail username and password? When will there be a secure API for me to pass those contacts along without giving up my password?" So here it is.
So next time Facebook, Plaxo, or another service wants to import your Gmail, Google Calendar, or Google Talk contacts you might not have to give up your email password. The API uses the Google Data protocol which is based on AtomPub (the same standard that Microsoft is now adopting). All contacts feeds are private and apps can use either the Google Client Authentication API or the Google Web Auth API for authenticating.
So now developers can now write an application that will allow you to synchronize your Outlook and Google contacts. The Contacts API allows developers to create, read, update, and delete contacts using the Google Data protocol, based on AtomPub
Source: Official Google Blog