Yes, the API uses a single user license to connect to the related database. Multiple instances of the same custom application will still only use one API user license. Third-party applications or custom applications can use the API to connect.  When initializing the API connection you can enter a user name and password as parameters, or you can have the login screen displayed where the user must enter a user name and password to proceed.

For Blackbaud Technology Partners seeking a method to initialize the API in an API license free mode so that it does require the client to purchase and unlock the API module, please review the following article.

What changes need to be made to the API to allow a license free 3rd party integration?