In general, a web application is a subset of website. A website can contain anything, even if its purely static contents. But a web application usually is at least very dynamic and interactive. A website can be built with mere designers, but you always need competent coders to work on a web application.
Anyway, its impossible to get any unbiased opinion on this matter, since theres no official definition of this difference. My answer was just the most accepted opinion, but you may think differently if you want to. You may read this stackoverflow article to see more information, and judge for yourself:
http://stackoverflow.com/questions/8694922/whats-the-difference-between-a-web-site-and-a-web-application