IIS7 has some major changes to better support WCF and one of the key pieces is the new integrated application pool. This session from PDC talks about some of these challenges from the perspective of making WCF services perform better: http://channel9.msdn.com/pdc2008/TL38/
This page has a good overview of IIS7 architecture: http://learn.iis.net/page.aspx/101/introduction-to-iis7-architecture/.
I’ve included some of the key information from this article on the purpose of the two different kinds of app pools below:
Integrated application pool mode
When an application pool is in
Integrated mode, you can take
advantage of the integrated
request-processing architecture of IIS
and ASP.NET. When a worker process in
an application pool receives a
request, the request passes through an
ordered list of events. Each event
calls the necessary native and managed
modules to process portions of the
request and to generate the response.
There are several benefits to running
application pools in Integrated mode.
First the request-processing models of
IIS and ASP.NET are integrated into a
unified process model. This model
eliminates steps that were previously
duplicated in IIS and ASP.NET, such as
authentication. Additionally,
Integrated mode enables the
availability of managed features to
all content types.Classic application pool mode
When an application pool is in Classic
mode, IIS 7.0 handles requests as in
IIS 6.0 worker process isolation mode.
ASP.NET requests first go through
native processing steps in IIS and are
then routed to Aspnet_isapi.dll for
processing of managed code in the
managed runtime. Finally, the request
is routed back through IIS to send the
response. This separation of the IIS
and ASP.NET request-processing models
results in duplication of some
processing steps, such as
authentication and authorization.
Additionally, managed code features,
such as forms authentication, are only
available to ASP.NET applications or
applications for which you have script
mapped all requests to be handled by
aspnet_isapi.dll. Be sure to test your
existing applications for
compatibility in Integrated mode
before upgrading a production
environment to IIS 7.0 and assigning
applications to application pools in
Integrated mode. You should only add
an application to an application pool
in Classic mode if the application
fails to work in Integrated mode. For
example, your application might rely
on an authentication token passed from
IIS to the managed runtime, and, due
to the new architecture in IIS 7.0,
the process breaks your application.