There are actually two kinds of apps for the mobile phone and tablet market. They are native apps and web apps.
With a web app, it is hosted on a website and mimics the look and feel of a native app with exception of the way it is installed and its limitations to using various functions of the device it’s installed to. To install, you have to save the entrance screen to the device home and it then places the app icon on the desktop of the device. Web apps can utilize many of the same functions of a native so depending on what the purpose of the app is; you may be able to use a web app which is much cheaper to produce.
Web apps don’t need to be submitted to Apple so they won’t appear in the iTunes store or the Droid store so that is one of the drawbacks to web apps.
Native apps are created using various languages, compiled and then submitted to either iTunes or the Droid market. These apps can take advantage of all the device functions and are installed by downloading them from the app stores. Because of the complexity of languages used to create native apps, these are generally priced much higher.
Choosing which type of app to use really comes down to what your app is going to do and how you want to distribute it.