Webapps are your custom web applications, local to your HDA. The power of [http://en.wikipedia.org/wiki/LAMP_(software_bundle) LAMP] at your fingertips, right in your home server. They could be your own code or a customized version of an existing app.
See [http://amahi.blip.tv/file/1491674/| the screencast on how to use webapps].
NOTE: the screencast is slightly outdated - the webapps are no longer in their own tab - they are under Applications -> Webapps, and Advanced settings must be enabled for them to show.