'Application' seems to be one of the most overused terms in the industry today. During our usabilty studies, the use of the word tended to confuse people as they had their own concept of the term. Therefore, when I saw a great explanation of the term from Bill in one of his vision documents I only felt it as my obligation to post this on my blog.
"The term application is widely interpreted in the industry and is used here in three distinct contexts. It is used to refer to a highest-level system that an end user is interacts with to access what the user perceives a meaningfully coherent and business significant set of features – e.g. a CRM application, a payroll application. The term is also used to describe atomic systems such as Windows applications, Web applications, Exchange applications etc. that are implemented individually and then configured to create systems and ultimately to compose user applications. It is also used as general adjective to describe in lose terms a layer of systems and other elements that lie at or near the top of the stack of functionality that implements custom user-oriented functionality and which is not considered reusable infrastructure. Of course, one person’s application is often the next person’s infrastructure. Context should always make the use of the term clear. "