@Vlad Mucescu gave a good answer but it seem the part where he describes recycle of an application he speaks about Overlapped Recycling. There are two recycling types: Process Recycling and Overlapped Recycling (source MSDN):
Worker process isolation mode offers process recycling, in which IIS automatically refreshes Web applications by restarting their worker processes. Process recycling keeps problematic applications running smoothly, and is an especially effective solution in cases where it is not possible to modify the application code.
Process recycling, which follows the occurrence of a recycling event, can happen in two ways.
If the worker process currently serving the application pool terminates, then the WWW Service (W3SVC), acting as the parent process to the worker processes, restarts a new process in its place.
When the worker process terminates, a new one is started simultaneously. This type of recycling is called overlapped recycling. It is the default for all application pools.
In an overlapped recycling scenario, the process targeted for a recycle continues to process all remaining requests while a replacement worker process is created simultaneously. The new process is started before the old worker process stops, and requests are then directed to the new process. This design prevents delays in service, since the old process continues to accept requests until the new process has initialized successfully, and is instructed to shut down only after the new process is ready to handle requests.