Selenium WebDriver 2.0: It helps to write scripts for automating browsers..this package provides us with classes to attain automation. After writing scripts we are able to run them on native MACHINE and see automation ourselves. WebDriver projects were merged with selenium RC to overcome the drawbacks of selenium RC making it selenium WebDriver 2.0
Selenium Server: Once you actually have your scripts (as mentioned above), To run scripts on REMOTE MACHINES (Test Beds) and NOT ON native MACHINE we do it using selenium server. So in short Selenium Webdriver works together with Selenium Server and they co-exist to help and not to replace each other.
I hope this helps