WAD is not an acronym or abbreviation. It's just “WAD.”
The Fable WAD Archive stores the Level Scripts, Meshes, and AI Navigation Data.
Dumping the WAD into an override folder:
First you will require this program. If you are planning to dump the WAD on the PC game all you have to do is click File > Open and make your way to the place that the WAD is located. Make your way to the place that you installed the game to then Data > Levels and select the WAD. Then select whether you want the lev files to be modded or not (this allows for free-roaming), then click Rip. A new folder should then appear when this is complete there should be a folder named FinalAlbion containing a whole bunch of TNG and LEV files.
If you want to do this for the XBox version you will go through pretty much the same process. Just FTP into your XBox and grab 'FinalAlbion.wad' and save it to your computer's HDD. Then do the same process. Select the file and click Rip (don't forget to choose whether you want the LEV files patched or unpatched). Next go back to your XBox and rename FinalAlbion.wad to something like FinalAlbion1.wad incase you need the file again for later use. Then upload the folder FinalAlbion to F:\Games\Fable:TLC\Data\Levels\ (I say the F drive because that is the default for where my XBox saves Games to).
You have now dumped your WAD to the override folder (FinalAlbion) and are now ready to begin editting the TNG files with greater ease.