Web servers serve static content - static HTML pages and images. Application servers on the other hand, can server dynamic content depending on the request. They can interact with databases and have business logic.
If you have only static pages to serve, there is no need for an app server. But if you need an application which performs some operations based on user request you need an app server.
This is an oft asked question. You can search this or the servlet forum or Google for a better answer. [ March 03, 2006: Message edited by: Satish Chilukuri ]