WebAssembly is used in Polkadot and Substrate as the compilation target for the runtime.
WebAssembly, shortened to simply Wasm, is a binary instruction format for a stack-based virtual machine. Wasm is designed as a portable target for compilation of high-level languages like C/C++/Rust, enabling deployment on the web for client and server applications.
WebAssembly is a platform agnostic binary format, meaning that it will run the same instructions across whatever machine it is operating on. Blockchains need determinancy in order to have reliable state transition updates across all nodes in the peer-to-peer network without forcing every peer to run the same exact hardware. Wasm is a nice fit for reliability among the possibly diverse set of machines. Wasm is both efficient and fast. The efficiency means that it can be uploaded onto the chain as a blob of code without causing too much state bloat while keeping its ability to execute at near-native speeds.
By using Wasm in Substrate, the framework powering Polkadot, Kusama, and many connecting chains, the chains are given the ability to upgrade their runtime logic without hard forking. Hard forking is a standard method of upgrading a blockchain that is slow, inefficient, and error prone due to the levels of offline coordination required, and thus, the propensity to bundle many upgrades into one large-scale event. By deploying Wasm on-chain and having nodes auto-enact the new logic at a certain block height, upgrades can be small, isolated, and very specific.