functions that an LLM can use in its reasoning are called "tools", so the prior is probably more correct in the sense that an API can be used to provide the LLM tools
My eye twitches every time I see something like "a lot of MCPs are". It's probably a lost cause at this point, but it's an MCP Server, not an MCP. And the other side of that connection would be an MCP Client that lives in an MCP Host which almost certainly could simply be called an Agent.
