The API vs. AT command methods are simply two ways to communicate with the XBee. Nothing to do with the radio itself nor its RF characteristics.
The API mode should not be used if you are simply going to use the wireless serial port extension or Digi’s virtual wire.
The API mode gives you a comprehensive API for addressing each frame, etc, for a multi-node system. The API mode is somewhat complex, but if you NEED it, there are several freeware code libraries around.