The confusion comes from the fact that a web application, or any type of app performs some useful function. You interact with it somehow to complete some job that you need done. But now when most people hear the word app, they recall hearing the catchy phrase there's an app for that and associate that with their phone. Apps then become something that is on their phone.
TenPixesl wraps up with this bit of advice,
The train of thought required to build a web app is quite different than a web site. When building a web site, some common questions might be what information do I want to display, and what's the best way to display it? When building a web application, the questions become features. A developer will ask what does this app need to do? What are we trying to accomplish.