"Application Server" has been a common buzz word in Java world for many years. J2EE Application Server hosts Java applications and provide environment for deployment, configuration, transaction, logging, session management, instance management, reporting, exception handling, load balancing etc. What application developer cares is mainly the application's business logic.
Application Server in Java world makes perfect sense, because Java runs on different operating systems. It is necessary to build a common environment to hold applications.
But in .NET world, "Application Server" is not well-known. We do not need Application Server in .NET, right? Yes or no.
Yes. The main reason is that .NET is built upon Windows system, so that .NET can use features provided by Windows System (e.g. Transaction, Logging) directly.
No. We still need an integrated environment for Enterprise software. That is the reason why MS Enterprise Library exists. But to set up and use that library is still complex for a normal developer. Compared with Java Application Server environment, .NET framework is not an integrated product for developers and project managers. The only one Application Server I know is Interactive Server. From my research on that product these days, it has some limitations.
So, can we make an application server product to hold various .NET applications? Technically yes, although not easy. Maybe MS will build application server later. I heard a rumor that IIS 7 is a kind of Application Server, but I doubt. :)