Start here. This is the direct spoken answer to practice first.
Why this question matters
An App Service plan defines worker size, instance count, shared compute, and part of the application's blast radius. Scaling helps only when the constrained resource is in that tier and the application behaves correctly across multiple instances.
An App Service plan is the compute container for one or more apps. Scaling up changes the size or tier of the workers, while scaling out adds more instances. If multiple apps share the plan, they share CPU and memory capacity, so one busy app can affect another. For a .NET API I would design as if requests can land on any instance, which means no important user state in process memory or local disk.