You specify webapp_name when you export the REST Web application. The process of exporting involves specifying all of the services you intend to include in the application and naming a WAR as the destination. The name of the WAR file becomes the Web application name, webapp_name.
Note that when you export an application file in Progress Developer Studio, all the necessary files (including default runtime library files, configuration files and static files) are included in the WAR file in addition to the references to REST resources.