Web Application 
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Web Service 
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Web application is for Users. 
 | 
  
Web services are for machine/program to
  machine/program communication. Web services are intended for other                   applications 
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Web applications usually present data in HTML which
  looks nice to the user 
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Web services usually present data in        XML which easy to parse by other
  applications. 
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Eg. Calculator is an web application that uses add,subtract and many other webservices in combine. 
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Eg.  
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Lets take an example of
Google search. We can use Google search in two ways. First, we can visithttp://www.google.com and put out query
for search. Google the returns the result. Second, we can integrate Google
Search in our websites with custom search API.
In first case Google
Search is acting as web application while in second example it is acting as web
service.
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