API pagination is crucial for handling large data sets by splitting results into smaller chunks, which improves server load, reduces network traffic, and keeps applications responsive. There are two main pagination methods: offset-based and cursor-based. Offset-based pagination is easy to implement but can be slow and inconsistent with large or fast-changing datasets. Cursor-based pagination, though more complex, offers greater consistency and performance by using index columns or timestamps as cursors, making it ideal for real-time data.

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