The Conversions API allows you to submit events that you would like to report on and potentially pay partners for. There are many types of conversions, with the usual examples being sales, leads, and subscriptions. Conversions may include item-level data. For instance, if you are tracking a sale you may want to include each item purchased (e.g. 2 lego sets at $40 each and 1 doll at $6.99).
Once a conversion is attributed to a source and a payout is determined it is then considered an Action. See the Actions API for more details on attributed conversions.