A Web Application is similar to an application on your computer except that all the information and software actually exist on a remote computer called a server.
A Web Application is typically viewed inside a Web browser like Microsoft Internet Explorer or Firefox by access a remote Web address called a URL (Uniform Resource Locator) that looks like http://www.yahoo.com/. This address tells your Web browser to "go and get" the information and software at the specified address. Of course, you can view pictures and Web files that exist on your computer just fine, but the difference is that those files are coming from your "local" computer while those files using a Web address are coming from a computer far away.
ECommerce applications like Amazon and Ebay or search engines like Google are Web applications. What you see in your Web browser is simple enough but a complex software application produced what you see in your Web browser just for you based on your preferences (e.g., favorite books, previously viewed books, search terms, etc.).
The exciting part about Web Applications for you is that anyone, at any time can access shared information (with the correct permissions, of course). This makes working as a team very easy with no special software to install or update.