An application in the Mac. Although files with an APP extension appear to be single files, they are actually a hierarchy of files and folders that contain the executable program, other software components and data. Known as an application "package" or "bundle," the APP file extension is used with several other operating systems.
iOS Mobile Apps
Apple's iOS apps also use the APP package, although for ARM hardware rather than Intel. When submitting to the App Store, the Xcode development system compresses (zips) the APP package along with iTunes images and meta-data into an archive with the iPhone App (IPA) extension.
Here are some of the utility apps that come with Macs. For example, Grab.app is a screen capture tool, and Migration Assistant.app copies files to another computer.
Inside the Grab App Package
Grab.app is actually a Contents folder that contains these files and folders. Right clicking an .app file and selecting Show Package Contents reveals the hierarchy.
It Can Be This Complex
The entire hierarchy of the Firefox browser app (Firefox.app) is drawn out all the way just to show how elaborate the contents of a package can be.