Sure webmail had been out for a decade before GMail. But I believe the point was that Gmail was special in that it was a pioneering user of AJAX-style interactivity.
Pre-AJAX, web-based services were just a series of forms, and the interactivity patterns harkened back to "smart terminal" [1] form-based use for mainframes in the 1970s. I believe the user you were responding to uses "application" to mean something approximating the desktop application experience of the 80s or the current mobile app experience.
So the distinction they're drawing is about the kind of interactivity. Squirrelmail, et al, were a series of forms and pages. GMail didn't do a new page or frame load every time you looked at a new message. UI rendering and interactivity became client-only activities, with the server providing an API.
[1] now known as block-oriented terminal: https://en.wikipedia.org/wiki/Block-oriented_terminal