WebDAV is a way to publish files to your server. I've been a fan since I first saw it and have been teaching people about it for years. When you have everything setup correctly, you can open a web folder in Network Places (or neighborhood or whatever), or on your desktop, and when you drag and drop files into the folder, it publishes over the network using http to the server. Unfortunately, the story about DAV from Microsoft's end has been rather mottled. The specifics of what is possible using DAV, how it appears and behaves depends on the precise combination of which server you're using (DAV was supported on IIS 5 as well), the client (XP, 2000, Vista), and what application you use to do the DAV connection (Explorer, IE, Office, FrontPage).
However, in IIS 7, there is some very good news. Robert McMurray on the IIS team is the same guy that manages the FTP 7 project. He has improved, the DAV story for IIS 7 in many ways. I've had the chance to chat with him on numerous occasions about his vision and hopes for DAV and other publishing protocols and can tell you that he's the right guy for the job.
One of the biggest improvements is that DAV can be enabled per URL. In IIS 6, and 5, DAV was either functional for all sites or not. Now, you can use it just where you need it. The IIS 7 DAV provider integrates with the IIS 7 UI and leverages IIS 7 URL Authorization. URL Auth lets you allow or deny access to content using web.config files instead of ACLS.
This version of DAV is the SERVER side component. The client side will use one of the various providers mentioned earlier - but should work by simply creating a network connection to a dav enabled URL. One way to do this is in IE, using File, Open and selecting the checkbox "open as a web folder".
Once you setup DAV and get used to using it, you'll wonder how you managed without it.
http://blogs.iis.net/robert_mcmurray/archive/2007/12/22/webdav-module-for-windows-server-2008-golive-beta-is-released.aspx
-brett