An annotated bibliography is similar to a bibliography or reference list, only an annotated bibliography features a brief description or assessment of each cited source - an annotation. Annotations are typically comprised of a short paragraph or two, but can be longer.
An annotated bibliography can serve the following purposes:
For examples of annotated bibliographies in APA, see Annotated Bibliography Samples at the Online Writing Lab by Purdue University.
The format of an annotated bibliography can vary, so if you're doing one for a class, it's important to ask for specific guidelines. Generally, though, each entry will feature a citation in APA format followed by an annotation.
The citations: Each citation will appear in the same form as they would in a reference list, including all of the same components and with a half-inch hanging indent.
The annotations: The annotations for each source are written in paragraph form. The lengths of the annotations can vary significantly from a couple of sentences to several paragraphs. The length will depend on the type of bibliography. Depending on the assignment, there may be a specific guidelines for what you are expected to discuss about each source. If you're not sure, good rule of thumb if you're not sure is to follow these steps:
Below is an example of one citation and one corresponding annotation from an annotated bibliography.
Note that the citations feature hanging indents, and that the annotations are further indented.

The specifics of an annotated bibliography (how many resources are reviewed, whether the optional sections below are present, what the annotations cover) are usually decided by the instructor. Please check your assignment or syllabus to get an idea of what is expected.