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Documentation says:

Configure indexers

Use this command to set the following indexer options:

Update on save (realtime): Indexed data is updated as soon as a change is made in the Admin. (For example, the category products index is reindex after products are added to a category in the Admin.) This is the default.

But this behaviour fires after a product is updated via web API?

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    It should. You can easily tested out
    – Marius
    Dec 13, 2019 at 8:57

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The documentation should not say "in the Admin" instead it should say when the product is saved. If you save via API then it is being saved and indexing occurs "on save".

The alternative, on schedule, will use triggers to place the changed data in a queue and then update indexing via a cron.

Either way if a product is saved the index should be updated - either directly by save or indirectly via the cron.

For performance reasons you should choose on schedule, here is a nice talk explaining the details of why - in short it is much faster and less consuming of resources.

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