oEmbed is a format for allowing an embedded representation of a URL on third party sites.
What does it mean?
For example, if you are sharing the youtube in Facebook status, you simply copy and paste the youtube Url and Facebook app knows how to embed it nicely with preview picture and video description.
What does it mean for developer?
You can apply it for two things.
1> If you are trying to make sharing the contents in your site easy for users to allow them to share and embed in other sites, you can implement oEmbed API service interface for others sites to consume it.
2> If you are trying to allow users to embed contents in other sites like Youtube, Flickr, etc in your site, you can consume API interface of those sites which provides the oEmbed data for you to nicely present them in your site.
To find out more:
http://www.oembed.com
http://engineering.twitter.com/2010/09/tech-behind-new-twittercom.html
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