“Do I Want a Website or a Web Application?”
Do you want to give information or do you want to get it? That's the difference.
Your favourite news source is a website. It distributes information. Same with your favourite neighbourhood restaurant website—you, as a customer, can check the hours and menu online without giving away any information about yourself.
Websites tend to be less expensive. Well-established publishing platforms like Drupal or Squarespace can deliver the content. The investment into that content—the words and pictures—is what's important.
Twitter, Facebook, and eBay are web applications; the user interacts and provides information in order for the application to work.
With a web app, the content comes from the user so the investment is in the workflow. These apps are customized and tailored for your needs. The investment tends to be much higher, but they're more powerful and can do exactly what you need.
So which is best for you? A website or a web application? That depends on what you want to accomplish.
Do you want an easy way for your customers to get information from you? Or do you want to your users to be able to perform a task?