Windows SharePoint Services 3.0 builds on top of Windows Workflow Foundation to enable workflow to be used on list items and documents. So you can create your own business logic to work with the content in WSS to create your own applications. Microsoft Office SharePoint Server (MOSS) takes this to the next level and has some out of the box workflows built in that you can associate with your lists. If Project Server is installed with MOSS then a new feature of Project Server 2007 becomes available - an automated workflow approval process for proposals.
This feature makes use of the new server side light weight projects, and there is a certain type - called a proposal. The idea is that this proposal is a set of steps you need to follow to get a project accepted, and when you create the proposal it will also create a WSS Task in a list that has a workflow associated with it. This task will be assigned to a user in the Proposal Reviewers security group within Project Server. There is a special custom field associated with proposals called the state field. Initially this is set to proposed - but it gets changed automatically based on the approval status of the WSS task - if the reviewer says it is OK and accepts it, then the state field gets changed to Approved. This is a very simple example of how workflow can be used on the platform - your imagination can fill in the other extensions to this to make it work for your organizations.
As I mentioned - MOSS comes with some pre-defined approvals - but this doesn't stop you adding your own approvals to WSS lists even if you don't have MOSS. The easiest approach (which also works in MOSS) is to go to any list or library, then under Settings, Document Library Settings you will find Workflow Settings. You can configure simple workflows against the list from there. Using SharePoint Designer you can create quite complex workflows against WSS lists. One thing to point out here is that you will not be able to connect to a Project Server 2007 PWA site using SharePoint Designer as it is blocked due to the risk of you breaking some of our functionality. However you can connect to the Project Workspaces (often referred to as PWS sites) that you create for individual projects. If SharePoint Designer doesn't do enough for you then you can also create workflows using Visual Studio 2005. These can obviously be much more complex and if you wanted to integrate deeply with Project Server through events and the PSI then this is the tool for you. Once you create workflows through Visual Studio you can then consume these either through SharePoint Designer or even have them appear in the workflows available through the workflow settings of the libraries.
So if this has sparked your interest in workflow the next places to go are:-
Windows Workflow Foundation - http://msdn2.microsoft.com/en-us/library/ms735967.aspx
Workflow Development for Windows SharePoint Services - http://msdn2.microsoft.com/en-us/library/ms414613.aspx
Visual Studio 2005 extensions for .NET Framework 3.0 (Windows Workflow Foundation) - http://www.microsoft.com/downloads/details.aspx?familyid=5D61409E-1FA3-48CF-8023-E8F38E709BA6&displaylang=en
and the general SharePoint blog also is a great place for all information on the MOSS platform - http://blogs.msdn.com/sharepoint/
If you are considering MOSS then there are plenty of other benefits on top of Project Server. One would be search - to enable all those Project Workspaces to be easily mined for information. Another would be Excel Services which enables you to load, calculate, and display Excel workbooks on Office SharePoint Server 2007. I know one of my colleagues is preparing a post on the use of Excel Services with Project Server to visualize data so I will not steal his thunder - but instead suggest you subscribe to Christophe's blog at http://blogs.msdn.com/chrisfie to make sure you do not miss it.
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