IIS7 is based on WAS, but Is there any differences between hosting in WAS and hosting on IIS7? Is there a limitation in using IIS7 or advantage in using WAS?
WAS is a process activation mechanism not a separate hosting environment. Using IIS7 or higher with WAS enabled will allow you to host applications that use non-http bindings such as TCP and MSMQ bindings. The advantage is that you don't have top create your own host to expose these type of endpoints and you can take advantage of IIS application management features and administration.