I flew directly into the US a few years ago on a Visa waiver. So I had the green stub stapled in my passport. Drove to Canada in a rental car to visit a friend for a day or two. No problems at both border crossings. Canadian official stamped my passport on the page opposit the green stub with an arrow pointing to it. Two days later the US official saw my passport with the green stub, waived me through.
The way I understand it is that the first time you enter the US, whether by land or air, you need to fill in the green visa waiver form (one per person) and the white customs form (one per family). The stub of the visa waiver form is stapled into your passport and acts as your visa during your visit. You need to give it to an official (or the checkin staff will hand them in in bulk, when leaving by air) when you leave the US (unless you intend to come back within the visa waiver validity period, I guess). The paperwork apparently costs a minor sum of money, which is included in the ticket price if arriving by air?
Do allow plenty of time for your border crossing though. On the way back, I had to queue up for more than an hour. And staying polite to any customs or immigration officer is a good idea in any country.