Selenium WebDriver is the successor to Selenium RC. Selenium WebDriver accepts commands (sent in Selenese, or via a Client API) and sends them to a browser. This is implemented through a browser-specific browser driver, which sends commands to a browser, and retrieves results. Most browser drivers actually launch and access a browser application (such as Firefox or Internet Explorer); there is also an HtmlUnit browser driver, which simulates a browser using HtmlUnit.
Unlike in Selenium 1, where the Selenium server was necessary to run tests, Selenium WebDriver does not need a special server to execute tests. Instead, the WebDriver directly starts a browser instance and controls it. However, Selenium Grid can be used with WebDriver to execute tests on remote systems. Source: CoolInterview.com
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