WunderGraph is a Backend-for-Frontend tool that enables building serverless applications with GraphQL Live Queries. To create a scalable and real-time chat app, developers can use Next.js as the frontend framework, Fauna as the database, and WunderGraph to manage data dependencies and operations. The application uses GitHub sign-ins for authentication, and NextAuth handles authorization. The chat window is built using WunderGraph's Live Query feature, which reduces server load and network traffic compared to client-side polling. By following the step-by-step guide, developers can create a powerful combination of technologies to build real-time interactive chat experiences.