This is a really cool video from Ryan Singer who demonstrates how he and his company (37 signals) design web applications.
Ryan Singer at Future of Web Apps, London 2010 from Ryan Singer on Vimeo.
They follow a few simple steps to make it all happen: model, screens, designs, html/css and live code. In his demonstration, Ryan makes it look incredibly easy to get something up and running. It's worth a watch if you want to learn to how rapidly design and prototype a web application.