Work capacity is a concept often tossed around but rarely defined. In short, it's just a term used to describe how much of / how well you are able to get something done.
When you are training, a higher work capacity means that you are able to do the same thing with lower demands or more stuff at the same demand. Think about it in terms of running, if you are able to run a given speed for a given amount of time at a specific heart rate and over time, at that same speed and duration, you test again and your heart rate is lower, then your work capacity has increased. This is the cornerstone idea behind "training to train."
The more we train the more work we are able to do in a given workout. The more work we can do means the our body is A) adapting and B) able to handle an even larger workload leading to greater adaptation. This concept is critical for athletes and the general public. "Training to train" is a concept that is often overlooked and not discussed, but paramount for optimal gains.