This is _specifically_ about HTTP APIs. REST is not a synonym for HTTP but there are much better resources out there that rant on about the important of hypertext and URL support etc.
This is mostly about the perspective of consumers.
>It does not matter too much which part of the URL is the one that is causing the URL to be wrong.
Your consumer disagrees, they'd like to know if their URL was fat fingered or if a record was missing. My argument is 404 is inappropriate because the web service exists, but the record doesn't.
> Thus `api/v11/employees/1` and `/api/v1/employees/100` both are wrong resources.
I can't say this is wrong, but it doesn't feel right. `/api/v11` straight up resolves to nowhere. Maybe this an instance where Gone is better than Not Found?
> Nobody is stoppping anyone to add response body to a 404 to indicate which nested resource is invalid. That can be added as a debug message for the developer for example.
100% agreed. It's just a thought I had while debating with my team.
I posted this here for this exact kind of feedback :D good points raised