API-based Discovery: Services can query the Consul API for a list of available?

Short answer: service instances. Example: You could use Consul to manage microservices like Payment Service and User Service, with each service registering with Consul and other services querying Consul to discover the addresses of available services.

Real-world example (ShopNest)

ShopNest splits Catalog, Cart, Order, and Payment into services so teams can deploy catalog changes without redeploying payments.

Say this in the interview

1. Define — one clear sentence (the short answer above).
2. Example — relate it to a project like ShopNest or your real work.
3. Trade-off — when you would not use it.