APK stands for Android Package (sometimes Android Package Kit or Android Application Package). It's the file format that Android uses to distribute and install apps. As a result, APKs contain all the elements that an app needs to install correctly on your device.
Generally, archive files (like ZIP) are used to combine multiple files into one, in order to make them more portable or compress them to save space. When an archive is used to distribute software, it's then called a software package.
As it turns out, android APK are a variant of the JAR (Java Archive) file format, since a lot of Android is built in Java. All APKs are ZIP files at their core, but they must contain additional information to properly function as an APK.
So all APKs are ZIPs, but not all ZIPs are APKs. If you're curious, you can crack open an APK file and see what's inside. Just use one of the best file extraction tools, like 7-Zip, to open it like you would any old ZIP file.
APK files allow you to install apps on your Android phone. They're similar to the APPX files used to install Store apps on Windows 10, as well as corresponding package files on other platforms. When you open an APK on your device, it contains the instructions to install on your phone, plus provides information about itself to your device.