The Pwned Passwords API is an online service that allows developers to check whether a password has been exposed in public data breaches across the web. The API can be used to advise users to choose better passwords when they sign up for services or log in, and it provides a way to validate user input against this database of compromised passwords. A Ruby gem called pwned makes it easy to use the Pwned Passwords API in Ruby applications, and there are also gems available specifically for Rails that provide an ActiveModel validator for validating user passwords against the API. These tools can help encourage users to use stronger passwords and improve overall security.