I know that there are many API's like JSON, Facebook, Twitter etc for developing related applications on iPhone, but how to understand an API? This might be a silly question but I want to know how? What would you suggest for for a beginner?
You should find relevant documentation and read through some code examples utilizing the API.
If you are looking for information about the iphone, as the tag suggests, then read through the information here. There is an entire section dedicated to sample code. If you really can't understand how to make something work after some effort and some googling, then you can always ask on StackOverflow.