Application pools are used to separate sets of IIS worker processes that share the same configuration and application boundaries.
Application pools used to isolate our web application for better security, reliability, and availability and performance and keep running without impacting each other . The worker process serves as the process boundary that separates each application pool so that when one worker process or application is having an issue or recycles, other applications or worker processes are not affected. One Application Pool can have multiple worker process Also.
Or we can simply say that, An application pool is a group of one or more URLs that are served by a worker process or set of worker processes. Any Web directory or virtual directory can be assigned to an application pool. So that one website cannot be affected by other, if u used separated application pool.
Source : Interviewwiz