SPS provides the following:

1. Taxonomy capabilities
2. Aggregated Search and Indexing
3. Audience Targeting
4. News and Announcements roll-ups

WSS provides:

1. Collaboration

This is the 100,000 foot view.

Does this help?

Portal Server 2003 uses Areas to reference and bring together sharepoint  Services Sites. SPS was built on top off SS.


If you take a look at Microsoft’s website, there’s a document which explains the differences.


www.microsoft.com/.../evaluationoverview.asp

The basic difference  is Aggregation(SPS) and Collaboration(WSS).
And then there are a set of functionality wrapped around each to support the aggregation and the collaboration piece.
Moreover SPS offers sharing across areas and the ability to have a full blown taxonomy. On the other hand WSS supports team room collaboration. You might also want to consider the audience/user group to determine if SPS is more effective or WSS.
Hope this helps.

Can you use both together? Why would this be practical?

It seems like I am already collaborating in SPS when I can send notifications to people on doc updates and people can post to discussion threads and post and review documents. Isn't this collaboration in SPS? I am not using WSS in any of that (that I am aware of).

These documents may help you:

SharePoint Products and Technologies FAQ
www.microsoft.com/.../faq.mspx
(the first couple of items touch on the benefits/differences)


"Deciding When to Deploy Windows sharepoint  Services and SharePoint Portal
Server 2003"
www.microsoft.com/.../evaluationoverview.asp
Learn about the relationship and the differences between Microsoft Windows(r)
SharePoint(tm) Services and Microsoft Office SharePoint portal  Server 2003. Use
this information to decide whether to deploy Windows SharePoint Services alone
or with SharePoint Portal Server 2003.
Included in this document:
- Introduction
- Requirements and Solutions
- Feature Matrix