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WebSphere is both a brand and a technology. The WebSphere brand covers a whole host of technologies that come together to create business solutions. For example, WebSphere Portal is a business solution -- underneath the covers it uses WebSphere Application Server (WAS), which is a runtime environment that WebSphere Portal runs on. Consider WAS like Domino, and WebSphere Portal a number of Domino databases that run on top of Domino.
From a technical perspective, WebSphere typically means the WebSphere Application Server –- or WAS product. WAS provides a bunch of services (called J2EE) that Java applications use. Services like database access, mail services and security services. Without an application WAS does nothing –- it has an administration interface but, unlike Domino you can't "do" anything with out of the box without an application. So you either buy a business solution (like WebSphere Portal or Commerce) or you write your own J2EE application. Simply put, WebSphere runs Java (J2EE) programs.
Related information from SearchDomino.com:
Learning Guide:
WebSphere Portal
Tip: Basic security considerations for a Domino/WebSphere system
Tip: Automatically start a WebSphere instance
Tip: Five patterns for using WebSphere or Domino in ebusiness sites
Reference Center: WebSphere Portal and Application Server resources
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