They are two different MMA organizations, but they are both owned and operated by Zuffa, Inc. Generally speaking, the UFC has better fighters than the WEC, but the WEC is still a legitimate organization. Because the two organizations are owned by the same promoter, they are very similar. The rules are the same, the referees are the same, and the commentators are sometimes even the same. Frank Mir is the leading WEC commentator.
When WEC fighters get good enough, they usually come up to the UFC. Steve Cantwell, the WEC light heavyweight champion, moved up to the UFC and delivered one of the most brutal armbars I've ever seen, dislocating Razak Al-Hassan's elbow. Meanwhile, a lot of UFC newcomers first fight in the WEC to get experience before the main stage. Tommy Speer fought in the WEC before fighting on The Ultimate Fighter 6 and in the UFC.
The WEC also has weight classes that the UFC doesn't, including a 145 pound featherweight class and 135 pound bantamweight class. Urijah Faber is widely considered the world's best featherweight and Miguel Angel Torres is the world's best bantamweight.
So basically, UFC and WEC are sister MMA organizations. They are different organizations, but very close to each other in every aspect of fighting and business.