We've always been worried about overlap, its not at all specific to Wordpress. There are a considerable amount of questions that would do equally well on Server Fault, as well as some that would be a great fit for Stack Overflow. What remains is, they are also a great fit for this web site, so I see no reason to close them.
The context of the question is what determines if it is or is not on topic here. For instance, I think this question is a great example of something that is very much on topic. Other examples would be questions that ask for help with organizing blogs, various ways to re-write links, the effectiveness of various plug-ins, etc.
A question asking about deprecated functions in Wordpress, even in the context of modifying a theme should probably be asked (or already has been asked) on Stack Overflow.
I didn't commit to or join Web Applications, but my understanding of the proposal and subsequent site is that it was about the use of third party web services and (possibly) their APIs. While yes, Wordpress could be considered a web app, I think such questions are more appropriate here, at least in the majority of cases.
There is also the other, strictly Wordpress SE site that is brewing on Area 51. I don't know when or if that is going to reach the beta phase, so I'm really not considering it yet when thinking about what is on topic for this site.
As @RandomBen said, yes .. the lines are a little bit muddled. However, I think Wordpress is a very popular tool amongst Webmasters and we should be entertaining (most) questions about it.
Finally, I could also say that Webmin is also a 'web app', but that doesn't make questions about installing or using it any less appropriate for Server Fault, or any more on topic for Web Applications.