wOBA is a version of on-base percentage that accounts for how a player reached base -- instead of simply considering whether a player reached base. The value for each method of reaching base is determined by how much that event is worth in relation to projected runs scored (example: a double is worth more than a single).
For instance: In 2014, a home run was worth 2.101 times on base, while a walk was worth 0.69 times on base. So a player who went 1-for-4 with a home run and a walk would have a wOBA of .558 -- (2.101 + 0.69 / 5 PAs).
Where "factor" indicates the adjusted run expectancy of a batting event in the context of the season as a whole: (unintentional BB factor x unintentional BB + HBP factor x HBP + 1B factor x 1B + 2B factor x 2B + 3B factor x 3B + HR factor x HR)/(AB + unintentional BB + SF + HBP).
Why it's useful
All methods of reaching base are not equal. On-base percentage only goes so far in measuring a player's value. OPS adds different values (OBP + SLG percentages) for different methods of reaching base, but those values are simpler than the wOBA method, which assigns the proper value to each event, in terms of its impact on scoring runs.
wOBA is a great barometer of a player's all-around talents at the plate. The better the wOBA, the more productive a player has been for fantasy purposes -- not taking position or speed into the equation.