An Application User is normally used when you need a account for another application, like Unity, IPCC, 3rd Party softwares to connect to CallManager.
End User, is used for IP Phone users, which is the same as the previous versions.
Check the following link for more information about the user of either of the users.
http://www.cisco.com/en/US/customer/products/sw/voicesw/ps556/products_administration_guide_chapter09186a008037e2d2.html#wp1028203
