Websites are static, meaning they are not updated, at least not all that often.
Websites are a huge part of the web and play super important functions like telling you today’s special at your local Italian meatball shop, or letting you know about a hot new startup that is about to launch.
Web applications are a whole different beast. Like desktop applications (Word, Photoshop, Skype), web applications are dynamic and ever-changing. Web applications rely on you to interact with them, whether by contributing content (YouTube, Twitter, Facebook) or by gathering data from other sources and presenting it to you (Mint, Google Analytics, Klout) or a little bit of both!
So here’s what you need to ask yourself if you have a web project you are working on: how often does this site need to be updated? Monthly? Weekly? Hourly? Do users provide some of the content? Can you pull data automatically and auto-update your site?
Your answers to those questions will go a long way towards helping you determine if it’s a website or a web application that you’ve got on your hands!