The Peetre K-functional is a key object in the development of the real method of interpolation. In this paper we point out a less known relation to wavelet theory and its applications to approximation theory and engineering applications. As a new basis for further development of these studies we present some known properties in the form appropriate for further applications and then derive new information and prove some new results concerning the K-functional and its close relation to (almost) quasi-monotone functions, various indices and interpolation theory. In particular, we extend and unify some known function parameter generalizations of the standard real interpolation spaces (A₀, A₁) _ᶿ,q.