I second that. A tab similar to the "World Settings" menu that allows developers to define and expose settings to the player would be really useful.
Perhaps it could be a tab during world creation, so each world could have its own mod settings.
Also, this API does not necessarily have to be complex, exposing a few Booleans and numbers should be enough for most modders.
Basically, this API should:
Let the dev expose custom setting fields, as well as default values, and maybe presets.
Standardize config formatting.
Handle config serialization and loading.
Provide the dev with an API to access said settings, without having to read the config file directly.