The ODS API is discussed at length in the Books Online, so I won't rehash it, but here's a broad overview:
ODS is a Call Level Interface (CLI) for building extended procedures and database gateways. Microsoft has deprecated database gateways in favor of linked servers, so these days ODS is used primarily for building extended procedures.
By CLI, I mean that the interface is non-COM. It's just a traditional DLL interface. The DLL exports functions that applications can call.
The ODS API is implemented in a DLL named OPENDS60.DLL. In SQL Server 2000 and later, this DLL is merely a proxy for the ODS routines themselves, which are implemented internally by the server. If you compare the size of the OPENDS60.DLL for SQL Server 7.0 ...