WAS (Windows Activation Service) is a technology developed primarily for web service hosting that gives you many of the benefits of hosting a web service in IIS, without actually using IIS. It is a stand-alone service that is meant to be "activated" when requests come in. These requests could be HTTP or some other protocol such as TCP or Named Pipes, which IIS doesn't support. Since the next generation of distributed computing technology (WCF) is protocol-agnostic, these two technologies seem to be made for one another. Gee what a coincidence.
If you're curious how to host a WCF service in WAS, I found a great article here. This is something to keep an eye on because it's geared up for WCF hosting. This is already available in Vista and it's clearly something you'll want in your bag of tricks when Server 2008 is released.