In my experience the "ApplicationCredit" is virtually worthless. You can't apply a credit after a merchant has uninstalled your app since their Shopify API access token has been revoked. And in the vast majority of cases, refund requests happen after a merchant has uninstalled the app.
Why so many refund requests after a merchant has uninstalled your app you ask? Because Shopify inexplicable doesn't prorate app charges when a merchant uninstalls your app in the middle of their 30 day billing period. Even if a merchant uninstalls your app 1 day into their 30 day billing period then Shopify's billing system still charges them for the full 30 days and doesn't automatically refund them back the difference. So we're often inundated with refund requests from merchants. We then have to send an email to Shopify's billing team to have them refund the charge. It's absolutely nuts!
Also, I have no idea how that API works, because I, like grandparent, always email support when there is a refund request.
Why is this not a simple button in the partner admin page?