To me a widget is an app that's on the screen. When you touch an icon for an app, it brings up the program. A widget does something without the program coming up. The power widget turns BT, WiFi, GPS and other things on and off. Another thing about a widget is that you can have information without having to open an app. Weather widgets let you see the temperature and Battery widgets show you the amount of battery you have. The app may do more, but the widget is handy.
Here's an example. Get MotoTourch (free), if you don't have it already. It has a widget. If you put the app icon on your screen, pressing it will bring up the program. You'll be able to turn the camera LEDs on/off, have it strobe and do Morse Code (enter what you want it to say). The widget does one thing, pressing it turns the LED on and off.
