What is a Webquest
Check out Webquest Direct or WebQuest.Org for a quite comprehensive definition.
For the historically inclined you can read the seminal paper on webquests by Bernie Dodge at WebQuest.Org.

Also from WebQuest.Org you can find links to a series of YouTube movies including this one introducing WebQuests.

For an updated view on Webquests check out Tom March articles including

Webquests do have their drawbacks as a Google search on "problem with webquests" reveals.

Perhaps the biggest drawback in the process is that too much reliance on webquests obviates the need for students to develop good search strategies and in an age where information is everywhere, being able to locate relevant and reliable sources is a key skill that can only be developed with time and experience in using search.